Unless the share market is closed for a public holiday, all stocks listed on it can be traded – bought or sold - without interruption during normal trading hours. However, there are rare times when a stock may temporarily cease trading, sometimes of its own volition and sometimes at the behest of the market operator if a stock receives what’s tantamount to a speeding fine for bad behaviour.
Given the alacrity with which ASX-listed stocks go into a trading halt or are temporarily suspended, Azzet decided to explain to readers what trading halts are, why they’re used and what threats and opportunities they present investors with.
When stocks stop trading
Stocks typically don’t stop trading without good reason and when they do, it isn't always a sign that anything good is happening.
A trading halt that a company imposes on itself is typically a prelude to price sensitive news.
In these cases, a trading halt can protect shareholders from any insiders privy to a pending announcement, acting on that information, before it’s announced to the broader market – aka insider trading.
Trading halts also prevent savvy institutional investors from capitalising on their superior market knowledge – compared with mum and dad investors - even if it isn’t tantamount to insider trading.
Equally important, trading halts could also prevent algorithmic trading computers from executing sell orders and materially impacting a share price.
Ultimately, what the trading halt is trying to do is prevent a free-for-all once a halted stock resumes trading.
Given that the share market is a weighing machine where buyers and sellers meet, a trading halt, ahead of critical news, will typically remove investors' temptation to place, amend, or cancel orders before it resumes trading.
Typically, the ASX will (under Operating Rule 16.4.2) grant a stock up to two full-day trading days within which it may enter a trading halt.
However, a trading halt can be as short as one hour during any trading day.
Trading halts can’t be used as a kind of ‘get-out-of-jail-free card' by stocks to simply buy management breathing space ahead of dumping bad news on the market.
However, if a stock feels it needs more time it can request a long-term voluntary suspension.
Three reasons stocks stop trading
Here’s what you need to know about trading halts and how they differ from suspensions.
- Trading Halt
On the ASX, a trading halt – aka Pause in Trading - is typically initiated when a company wants to create a circuit breaker between a pause in trading and the release of important new information.
Most trading halts are due to capital raisings, M&A announcements or new major contracts being entered into, all of which could have a material impact on the share price.
During a halt, all stock trading is frozen, meaning no buying or selling can occur.
The pause in trading is expected to give investors time to fully take stock of information and make the best possible decision once trading resumes.
- Pause in Trading
Trading halts aside, a Pause in Trading can also be enforced by the ASX (as opposed to the company) if it feels there is due cause to do.
Events that could a trigger trading to be temporarily suspended against a company’s will could be unexplained trading activity.
The ASX may choose a ‘please explain’ notice along with temporary suspension if the share price moves significantly without apparent cause.
The suspension in trading is typically lifted by the ASX once the company successfully addresses the ASX queries.
Then there are rare cases when the ASX will pause trading across the whole market to help stabilise it during turbulent conditions.
As a case in point, in November 2020, a glitch in the ASX’s clearing system (CHESS) led the market operator to pause trading for the entire market for almost an entire day.
- Suspension from Quotation
Arguably the most serious of the three trading halts, Suspension from Quotation, refers to the ASX’s decision to halt trading in a certain stock for a more extended period.
Suspension from Quotation can be applied to any number of speeding fines, which typically include financial distress, fraud, and/or any number of disciplinary measures.
Companies can also be suspended for failing to comply with the ASX listing rules.
For example, back in March 2025 Star Entertainment Group (ASX: SGR) was suspended from trading after failing to submit its accounts for the first half of the financial year.
Unlike a trading halt, Suspension from Quotation can potentially remain place until the underlying issues are resolved, or until the ASX is satisfied.
Tread with caution
Clearly, investors should proceed cautiously before purchasing a stock after a trading suspension has ended.
But that doesn’t mean you, as a value investor can’t capitalise on them.
Unbeknown to many investors, a trading halt can create a golden opportunity to acquire a good stock on the cheap. However, it can also inflict pain on those who misread the tea leaves.
It’s not uncommon for a stock’s share price to recover after a trading halt, especially if the substance of that trading halt has left the company trading at a sizable discount to its intrinsic value.
Similarly, by being one of the first out the door after a trading halt resumes, all you might be doing is locking in a maximum loss ahead of any price recovery.
Given that capital raising is by far the most common reason for a trading halt, it’s your job to do your homework.
Do your homework
What you want to find out is why a stock might want to raise funds, the underlying strength of its balance sheet and whether anything about the company’s fundamentals has materially changed.
Recent examples include trading halts entered into by the likes of Star Entertainment and Regional Express Holdings (ASX: REX) which were effectively raising sufficient working capital to keep them operating until a buyer could be found.
What separates Rex and Star from say the likes of Boss Energy (ASX: BOE) – which has recently raised funds – is the state of their financials.
Since entering a trading halt on 20 June 2023 ahead of a $200 million fund raise, Boss Energy is now trading 50% higher.
By comparison, Star and Rex are trading at all-time lows of $0.14 and $0.565 respectively.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
