Stock Trading Halts
What is a stock halt? Stock Trading Halts occur when a stock exchange gets halted or delayed by the Nasdaq, OTC or NYSE ( New York Stock Exchange ) when there is unusual trading volume or significant news expected out on a stock. A delay is called if this occurs at the beginning of a trading day whereas a halt is called if this occurs during the trading day. The halt or delay usually last an hour or less and this gives investors time to assess the impact of the news. If they didn’t halt or delay the stock, really bad news could be released about a company, and someone with multiple news feeds would have a major advantage over a retail investor.
There are two types of trading halts and delays – regulatory and non-regulatory. Regulatory halts are most common and happen when questions arise about the continued ability of a company to meet listing requirements and/or when a company has pending news that may affect the stocks price. Non regulatory halts occur when there is a severe buy and sell order imbalance in a security. When this imbalance occurs, trading is temporarily suspended in order to prevent a disorderly market.
Even the New York Stock Exchange (NYSE) can be halted. On July 8, 2015, the NYSE was halted due to a trading glitch.
Currently, there are 11 codes used by NASDAQ and other exchanges to specify why trading has been halted for the specific security. The OTCBB currently uses 5 codes. T-1 and T-12 halt codes are the most commonly used.
What is a T-1 Stock Halt? A T-1 trading halt is when NASDAQ has halted trading in a stock due to the fact that “material” news will be released soon. A T-1 code is used when News is Pending
What is a T-2 Stock Halt? Once the news has been released, the trading halt code will change to T.2. This means the dissemination process has begun through a Regulation FD compliant method, and the stock is still halted, but that the news has been released.
What is a T-3 Stock Halt? A T-3 halt code is eventually used when the news has been fully disseminated and there has now been a time specified as to when the stock will re-open for trading. This is called Halt Resumption Times and NASDAQ will display 2 specific times:
1. A time when market participants can enter quotations
2. A time at which the security will be released for trading.
What is a T-6 Stock Halt? A T-6 halt code means Extraordinary Market Activity. If NASDAQ believes that such extraordinary market activity is caused by the misuse or malfunction of an electronic quotation, communication, reporting or execution system, a T-6 code is used
What is a T-8 Stock Halt? A T-8 halt code is used for ETF’s that are misfunctioning
What is a T-12 Stock Halt? A T-12 halt code is used when NASDAQ or the listing market requests additional information
What is an H-4 Stock Halt? An H-4 code is used when trading is halted due to the company’s non-compliance with NASDAQ listing requirements.
What is an H-9 Stock Halt? When a company is not current in its required filings, trading is halted and a H-9 code is used.
What is an H-10 Stock Halt? An H-10 halt occurs when The Securities and Exchange Commission (SEC) has suspended trading in this stock.
What is an H-11 Stock Halt? An H-11 code refers to Regulatory Concern. Trading is halted in conjunction with another exchange or market for regulatory reasons.
What is a D stock Halt? A D Stock halt code occurs when a security has been deleted from NASDAQ/CQS
There is nothing an investor can do when a stock is halted. Shares can neither be bought nor sold, so there is no need to contact a broker. When the stock does re-open for trading though, many people will be frantically buying or selling, depending on the news, so be advised not to panic, and wait at least 30 minutes after the halt before placing the order. Hope for the best (buyout or major piece of positive news), but prepare for the worst (missed earnings, restatement of earnings, etc).