Trading Halts Explained: Halt Codes, LULD Pauses and How Trading Resumes

The short version

A trading halt is a stop on trading in one security, called by the exchange where it is listed (or, in the case of a suspension, by the SEC). While a stock is halted, no trades in it can print on any US venue. Orders can usually still be entered or cancelled, but nothing executes until the halt lifts.

Halts come in two broad families. Regulatory halts pause trading around information: news is pending, the exchange wants more information from the company, or the SEC has suspended the stock. Volatility pauses are mechanical: under the Limit Up-Limit Down plan, a stock that moves too far, too fast within a short window is paused for five minutes. Each halt carries a short reason code, and knowing what the code means tells you which kind of stop you are looking at.

The halt codes you will see most

Nasdaq publishes the code list on its Nasdaq Trader site, and the same codes appear in most market data feeds. These are the common ones:

A T1 halt is often followed by a T2 on the same stock: first the stop while news is pending, then a period after release so the information can reach the market before trading reopens. Other codes you may run into include H4 (non-compliance with listing requirements), H9 (not current in required filings) and MWC1 to MWC3 (market-wide circuit breaker halts that stop all stocks at once).

How Limit Up-Limit Down works

The Limit Up-Limit Down (LULD) plan, approved by the SEC in 2012, places a price band around every listed stock during regular trading hours (9:30 a.m. to 4:00 p.m. ET). The band is centered on a reference price, which is the average price of eligible trades over the previous five minutes.

The width of the band depends on the stock's tier and its prior closing price:

Under the plan text, these percentages are doubled between 9:30 and 9:45 a.m. ET and between 3:35 and 4:00 p.m. ET. Rights and warrants are excluded.

When the best bid or offer touches a band and stays there, the stock enters a limit state. If the limit state does not clear within 15 seconds, the listing exchange declares a five-minute trading pause. That pause is what shows up as LUDP (or M for a non-Nasdaq listing).

A worked example

Take a hypothetical Tier 2 stock, Company X, that closed yesterday at $4.00. At 11:00 a.m. its five-minute average trade price is $5.00.

• Band percentage: 10% (Tier 2, prior close above $3.00).
• Lower band: $5.00 × (1 − 0.10) = $4.50.
• Upper band: $5.00 × (1 + 0.10) = $5.50.

If the best bid rises to $5.50 and the market cannot trade through the limit state within 15 seconds, a five-minute pause begins. Had the same move happened at 9:35 a.m., the band would have been 20% wide, from $4.00 to $6.00.

How trading resumes

A halt ends with a reopening, not with trading simply switching back on.

• After a volatility pause, the listing exchange attempts to reopen the stock about five minutes later with an auction that matches buy and sell interest at a single price. If there is a large imbalance between buyers and sellers, the pause can be extended. If the reopening happens more than ten minutes after the pause began, the plan applies triple-width bands for the first 30 seconds afterward.
• After a news halt (T1 then T2), the exchange typically publishes a quotation-only period before the resumption time, and then reopens with an auction.
• After a T12 or H10, there is no fixed clock. A T12 lasts until the exchange is satisfied; an SEC suspension under Section 12(k) of the Exchange Act can last up to ten trading days.

The reopening price can be far from the last trade before the halt, because it reflects everything that happened while trading was stopped. One halt can also lead to another: a stock that reopens and moves sharply again can be paused again under the same LULD rules.

Halts outside the exchange

OTC securities are not listed on an exchange, so LULD does not apply to them. FINRA can halt OTC trading under its own rules, and those halts appear on FINRA's OTC daily list rather than in an exchange's halt feed. The SEC can also suspend trading in any security, listed or OTC.

How to check a halt on Signal8

• The halts screener lists currently active halts with their reason codes. An empty list is a normal state: it means no active halts were reported at that moment.
• The news feed and the live SEC filings feed are where the announcement behind a T1 or T12 halt usually surfaces.
• In the Terminal, open a symbol to see its quote, chart and filings in one workspace.

Related reading: how premarket volume is measured and what a reverse split does.

FAQ

What is the difference between a T1 and a T2 halt?

A T1 halt means news is pending: the exchange has stopped trading because the company is about to release material information. A T2 means the news has started to be disseminated through a Regulation FD compliant method, but trading is still halted so the information can reach the market. The two often appear in sequence on the same stock, followed by a quotation period and a reopening auction.

How long does a LULD trading pause last?

A Limit Up-Limit Down pause is five minutes. At the end of that time the listing exchange tries to reopen the stock with an auction. If there is a significant imbalance between buy and sell orders, the reopening can be delayed and the pause extended. A new pause can also start later if the stock hits a band again after reopening.

Can a stock be halted before the market opens?

Regulatory halts such as T1, T12 or H10 can be called at any time, including before the open. LULD volatility pauses cannot, because the price bands only apply during regular trading hours from 9:30 a.m. to 4:00 p.m. ET. A stock can therefore move a long way in the premarket session without a volatility pause.

Does a T12 halt mean something bad happened?

Not necessarily. T12 means the exchange has requested additional information from the company and is waiting to receive it. It can relate to unusual trading, a corporate announcement, or a listing question. The code itself does not say which, and the reason often only becomes clear from a later press release or SEC filing.