Trading halt

A trading halt is a temporary stop in trading of a security, imposed by the listing exchange or a regulator, usually to let material news be disseminated, to pause extreme volatility, or because of regulatory concerns about the company.

How it works

Halts carry codes that tell traders why trading stopped. Common Nasdaq codes:

A news halt is often requested by the company itself just before a major announcement, such as a merger, FDA decision or clinical data release, especially during market hours. Once the news is out, the exchange opens a quotation period and reopens trading through an auction.

Volatility pauses under LULD are triggered automatically and usually last five minutes. Market-wide circuit breakers halt all stocks at once after a large index decline.

The SEC can suspend trading for up to 10 business days if it questions the accuracy of public information about a company. Exchange halts for listing or regulatory issues can last much longer.

Why it matters for traders

A T1 halt during market hours is a strong signal that material news is coming, and the reopening price can be far from the last trade. Orders cannot execute during the halt, and stop orders do not protect you from a gap at reopening.

Repeated LULD pauses in a small cap, sometimes several in an hour, mark extreme momentum in either direction. Reopening auctions can produce large price swings because the imbalance accumulated during the pause clears all at once.

FAQ

How long does a trading halt last?

LULD pauses usually last five minutes. News pending halts typically last from under an hour to the rest of the session. Regulatory halts can last days, weeks or longer.

Can I sell a stock while it is halted?

No. Orders may be accepted or canceled, but nothing executes until trading resumes.