Glossary
Trading halt
A temporary stop in trading of a single stock or the whole market, ordered for pending news, extreme price moves or regulatory concerns.
A trading halt stops trading in a security for a period of time. Halts give the market time to absorb important news, to cool off after an extreme price swing, or to let regulators address a concern. Orders already resting may stay on the books or be canceled depending on the venue, but no trades execute until the halt is lifted, and that can change your risk in an instant.
The main kinds in the US
- News halts. The listing exchange can halt a stock when material news is pending, such as a merger or a clinical-trial result, and reopen it after the news is out, often within about an hour.
- Limit Up-Limit Down pauses. If a stock's price stays outside its LULD price band for 15 seconds during regular hours, the listing exchange pauses trading for five minutes (which can be extended), then reopens it with an auction.
- Market-wide circuit breakers. A fall in the S&P 500 of 7% or 13% from the prior close before 3:25 p.m. Eastern halts all US stocks for 15 minutes; a 20% fall closes the market for the day.
- Regulatory suspensions. The SEC can suspend trading in a company for up to 10 trading days, typically when information about it is unreliable.
What to keep in mind
You cannot exit during a halt, and the reopening price can be far from the last trade. Stocks can be halted repeatedly in one day on LULD pauses during violent moves. Under today's 7%, 13% and 20% levels, the market-wide breaker has fired four times, all at Level 1, on March 9, 12, 16 and 18, 2020.