Trading Halt

Trading halts give investors time to absorb important information or prevent disorderly trading. They can be triggered for several reasons.

A company-specific halt may be imposed when a company is about to release significant news, such as a merger, major results or regulatory decision, so that all investors can receive the information at the same time. Halts may also occur when there is uncertainty about a company’s disclosures or when regulators suspect fraud or manipulation.

Volatility halts, often called circuit breakers, pause trading when prices move too far, too quickly. Market-wide halts suspend all trading if a major index falls sharply.

For example, a company’s shares might be halted for an hour just before it announces an agreed takeover, then resume trading at a much higher price once the news is public.

Halts usually last from a few minutes to a day, although regulators can impose longer suspensions in serious cases. When trading resumes, prices can move sharply as orders that built up during the halt are matched.