What Happens When a Stock’s Trading is Halted?
Maybe it’s already happened to you: you want to sell shares in a specific stock and realize it’s been suspended from trading. After the initial shock, you then get worried and angry. How can it be that you can’t trade the shares? How long will the halt last? This is where you find out when and why shares are suspended from trading.
The management of FWB Frankfurter Wertpapierbörse (Frankfurt Stock Exchange) suspends a share’s listing when normal trading in the share is temporarily in danger or when it seems that suspension will protect the investor. Management can thus react to important corporate news, which usually is reported in the form of an ad-hoc announcement. The Frankfurt Stock Exchange’s terms and conditions identify special circumstances with the issuer as a reason for suspending a share from trading.
The threat of a company’s imminent insolvency is considered such a circumstance. So are significant changes in the company’s profitability and a pending capital increase, etc. Halting a share’s trading is supposed to give all investors a chance to digest facts that are important for determining the value of a company. The goal is to create symmetry in disseminating information to investors. Further reasons for suspending stock from trading are listed and explained in §25 of Rules and Regulations of the Frankfurt Stock Exchange.
The length of time that a share is halted varies from case to case. Generally, the listing is suspended for an hour. In exceptional cases, it can also be for longer periods of time. We let you know about current halted shares through our announcements.
All admitted shares on the Frankfurt Stock Exchange can be halted from trading. This is not the case with foreign shares, i.e. for shares whose domestic exchange is abroad. Although foreign shares can be halted from trading in Frankfurt, that only the Frankfurt Stock Exchange’s management merely follows the decision of the foreign exchange. To find out the reasons for the suspension, investors will have to contact the respective domestic exchange, for US shares, for example, the New York Stock Exchange. Or the investor should contact the company directly.
When a share is halted temporarily or for an entire day, existing
orders in both floor and electronic trading are erased for the
protection of the investor. This procedure is regulated by §6 of
the Frankfurt Stock Exchange’s terms and conditions.
It can happen, in particular in cases of limit orders with longer-term validities, that investors never hear about a share’s having been halted and they wonder why their open order no longer exists. Things are cleared up when they take a look at the Announcements database.