Trade Resumption: What It is, How It Works, FAQs

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What Is Trade Resumption?

Trade resumption refers to the commencement of trading activities after they have been shut down or halted, but may also refer to the resumption of trade between nations.

Key Takeaways

• Trade resumption is the commencement of trading activities after they have been shut down or the resumption of trade between nations.
• Trade resumption occurs after events such as a pending news announcement, an order imbalance, or other regulatory reasons cause a trading halt.
• FINRA notes that a trade resumption "does not mean that the SEC’s concerns have been addressed and no longer apply. Investors need to be careful before purchasing a stock after an SEC trading suspension has ended."

Understanding Trade Resumption

Trade resumption signals the reopening of open-market trading in a security, such as common stock or an entire exchange. It occurs after security trading is halted due to material information that needs time to disseminate or fundamental questions about the reliability of previously released information. A halt often occurs in anticipation of a news announcement, to correct an order imbalance, or for other regulatory reasons.

When a trading halt is put into place, the listing exchange alerts the market and other markets trading the stock must comply with the halt. While in effect, brokers are prohibited from trading the stock and publishing quotations and indications of interest.

Once the suspension ends, trade resumption occurs. However, as FINRA explains, certain requirements in SEC Rule 15c2-11 must be met for quoting and trading to resume for OTC stocks.

Special Considerations

A broker must file a form with FINRA that needs approval before quoting can resume. According to FINRA:

"The broker can file the form after obtaining and reviewing the company’s current information, including its organization, operations, certain control affiliates, the title and class of securities outstanding and being traded, and the company’s most recent balance sheet and profit and loss and retained earnings statement."

"The broker filing the form must have a reasonable basis for believing the information is accurate and reliable. A broker generally cannot quote or recommend the stock to any investor until the form is approved. After approval, the broker can begin quoting—and other brokers may also quote the stock relying, or ‘piggybacking,’ on the first broker’s quote without filing the form or reviewing the company information on their own."

The SEC has a limited ability to continue suspensions, so a trade resumption "does not mean that the SEC’s concerns have been addressed and no longer apply. Investors need to be careful before purchasing a stock after an SEC trading suspension has ended," according to FINRA.

Why Does a Trade Resumption Happen?

A trade resumption happens when trading activities are able to restart after being halted, usually due to impending news, an order imbalance, or regulatory issues.

What Is a Trading Halt?

A trading halt is a temporary suspension of trading activities for a security or securities at one or more exchanges, pending news, technical glitches, regulatory issues, or other concerns.

Is a Trading Halt the Same as a Suspension?

A trading suspension, unlike a trading halt, is ordered by the Securities and Exchange Commission (SEC). The SEC can suspend public trading in any stock for up to 10 days to protect investors and the public interest, according to U.S. securities law.

The Bottom Line

A trading resumption occurs following a trading halt or suspension. With a trade resumption, all buying and selling activities for a security, or in some cases, an entire market, are restarted. Typically, a halt occurs in anticipation of an event or due to technical issues or market order imbalances. A market-spanning halt can also be triggered after sharp declines in the S&P 500 under circuit breaker rules.

A trading resumption occurs following a trading halt or suspension. With a trade resumption, all buying and selling activities for a security, or in some cases, an entire market, are restarted. Typically, a halt occurs in anticipation of an event or due to technical issues or market order imbalances. A market-spanning halt can also be triggered after sharp declines in the S&P 500 under circuit breaker rules.