WHAT IS 'Halted Issue'

A halted issue is a planned security offering, such an an initial public offering (IPO) or a bond issue, that does not occur as planned. A halted issue can happen to any form of security that is about to be offered but which is prevented from being offered. There are a variety of reasons a securities issue could be halted, but the most frequent reason for a halted issue is because of some unexpected event, either relating directly to the security being issued or external to the security, that will reflect negatively on the issuer in the market.

BREAKING DOWN 'Halted Issue'

A halted issue is a security that is about to be issued that is stopped before the actual issue happens. A halted issue can happen for any number of reasons, and the reason could be internal to the organization issuing the security or external to the organization. As long as something negative happens that may affect the market for this new offering, it makes sense to halt the issue. If, for example, a corporation that is about to issue a corporate bond has a product launch that fails, this could affect the corporation's profits enough to lower its bond rating seriously enough that there is not enough interest in the bond for the company to release it. If an industry suffers a downturn in business, a company in that industry that is about to go public for the first time may halt the issue of the initial public offering (IPO) until the industry recovers to avoid issuing the IPO and having it fail or not pick up trading volume. 

Halted Issue vs Halting Trade

A halted issue is an initial offering of a security that is stopped before the security can be issued. Halting trade simply means suspending trade of a security for a period of time. While a halted issue necessarily implies something negative that will affect the success of the offering, halting trade can happen for any number of reasons, including suspected fraud, technological problems, mistakes, calls for more information or non-compliance with regulations or policies. Exchanges that have curbs such as circuit breakers, which are halts in trading when a security loses a specified amount of value in a short time, have systematized the process for halting trade by codifying the circumstances that would result in a trade halt. A halted issue may or may not ever be issued. Most securities for which trade is halted do trade again, sometimes in minutes.

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