During times of extreme market volatility, it's not uncommon for exchanges to temporarily halt trading to give everyone a breather and take in what is going on.
- What triggers a market-wide trading halt for equity markets?
- What triggers an individual stock to halt?
- What happens to my order during a halt?
What triggers a market-wide trading halt for equity markets?
Similar to the fusebox in your basement, if the market, namely the S&P 500, hits certain levels down, then it will trip a circuit breaker leading to a market-wide trading halt. When there is a market-wide halt, options will halt as well.
What are the Circuit Breaker Levels for Equity Markets?
According to NYSE Rule 80B, there are three circuit breakers. Times listed in Central Time (Chicago time). To learn more about this rule directly from the NYSE, please refer to the Market-Wide Circuit Breakers section by clicking here.
- Level 1: The S&P 500 drops by 7% from the previous trading day's closing price between 8:30 am to 2:25 pm - 15-minute trading halt and can only happen once per trading day.
- Level 2: The S&P 500 drops by 13% from the previous trading day's closing price between 8:30 am to 2:25 pm - an additional 15-minute trading halt and can only happen once per trading day.
- Level 3: The S&P 500 drops by 20% from the previous trading day's closing price at any time during the trading session - trading halted for the remainder of the trading day.
What triggers an individual stock halt?
Extreme price action and volatility can cause a halt
When an individual stock or ETF has any extreme price movements above or below a specified price band, then it may cause the underlying to undergo a five-minute trading pause, which can be extended. When an individual stock or ETF halts, then the options will as well. To learn more about stock and ETF halts, please refer to the Limit Up/Limit Down section at the NYSE by clicking here.
How do I know if the stock or ETF is halted?
Stocks or ETFs that are halted will have a red halted iconappear wherever you see the quote on the desktop platform.
What about a Market-Wide trading halt?
What happens to my order during a halt?
Orders remain resting and you can submit new orders
Orders previously working before a market halt or individual halt are still live but will be resting. However, you are still able to cancel or replace working orders during a halt. Please note that the quote displayed during a halt may not reflect the actual market after a halt due to potential price action.
A note about submitting Market Orders during a halt
Although market orders are designed to fill an order immediately, please note that market orders sent during a halt will not fill. Furthermore, leaving a market order resting during a halt may resort in very unfavorable fill price after a halt is lifted due to the potential widening of the bid-ask spread by market markers.