Why Would a Stock Be Halted for Trading?
- In the United States, two of the major exchanges where companies list public shares to be traded are the New York Stock Exchange and NASDAQ. Trading, or the buying and selling of a stock, can be halted or delayed for an hour or more. The stock is considered halted when the interruption occurs in the middle of the trading day and trading in a stock is delayed when trading in that security does not begin at the onset of the trading session.
- Stocks become halted because there is a piece of major company news set to be announced. By halting trading, investors and traders both have a chance to process the announcement before responding prematurely. Another reason behind halting a stock is in response to an order imbalance when the number of buyers of a stock is not proportionate with the number of sellers. A stock can be halted if there is uncertainty surrounding whether a stock continues to meet listing standards at an exchange.
- Sometimes there is contention between a stock exchange and the company that lists its shares there. In April 2011, Crystallex International, a Canadian-based company that issued shares on U.S. exchanges, experienced halted trading in its stock on the NYSE Amex. Shares were halted because the exchange believed the company no longer met listing standards. NYSE Amex expected that the stock would no longer trade, but Crystallex International defended itself by planning to appeal any de-listing process, according to the "Brandon Sun."
- Sometimes trading in stocks becomes halted due to a mistake. In February 2011, the London Stock Exchange halted trade on all stocks for four hours during the trading day. Trading was halted in response to a technical problem amid the integration of new systems into the exchange's trading platform. When all stock trades are halted on an exchange, that trading marketplace cannot handle trades and the business goes to another stock exchange.