Trading Halt

A trading halt is a temporary pause in the buying and selling of a security on one or more exchanges. Halts can be initiated by the exchange where the stock is listed, by the SEC, or triggered automatically by market-wide circuit breakers. There are several types of halts. News-pending halts (also called T1 halts) occur when a company is about to release material information that could significantly affect its stock price, giving all investors equal access to the news before trading resumes. Volatility halts, governed by the Limit Up-Limit Down (LULD) mechanism, are triggered when a stock's price moves beyond a specified percentage from its reference price within a five-minute window. Market-wide circuit breakers halt all trading on U.S. exchanges if the S&P 500 drops 7% (Level 1), 13% (Level 2), or 20% (Level 3) from the previous close. Regulatory halts may be imposed by the SEC when there are questions about a company's compliance with listing standards or when trading activity suggests manipulation. During a halt, no orders can be executed, though investors can typically still place or cancel orders. When trading resumes, an opening auction determines the new price based on accumulated buy and sell orders.