What is Held at the Opening?
Held at the opening is when a security is restricted from trading at the stock exchange's daily opening. Trading in the security may be halted for a variety of reasons, but is typically a temporary situation which delays the official opening of that security.
- Held at the opening is usually a short-term trading halt where the opening of a security is delayed.
- Non-regulatory halts are not shared across exchanges, so while an exchange may be delayed in opening due to an order imbalance, for example, the stock may still trade on other exchanges or ECNs.
- Circuit breakers halt all trading in US stocks for 15 minutes, or the rest of the day, depending on the circuit breaker level.
Understanding Held at the Opening
Held at the opening is in effect if a trading halt is called on a stock before the opening of the trading day. Stock exchanges can halt trading on securities at any time, but trading usually resumes in under an hour. Such halts are employed to protect investors.
There are three main reasons why a stock is held at the opening:
- New information is expected to be released by a company that may have considerable impact on its stock price.
- There is a large imbalance in buy and sell orders in the market, or a circuit breaker has been triggered.
- A stock does not meet regulatory listing requirements.
Trading delays are trading halts that occur at the beginning of the trading day. Traders can find trading halt and delay information on an exchange’s website.
A trading halt in general is a temporary suspension in the trading of a particular security on one or more exchanges, usually in anticipation of a news announcement or to correct an order imbalance or because a circuit breaks has been triggered (discussed below). A trading halt may also be imposed for regulatory reasons.
The Securities and Exchange Commission (SEC) highlights two types of trading halts and delays that may impact investors: regulatory and nonregulatory.
While the SEC cannot halt trading, it may suspend trading for up to 10 days and, if needed, revoke the security’s registration.
Regulatory halts occur when a company has pending news that may affect the security’s price. By halting or delaying trading, everyone has time to assess the impact of the news. These halts may also occur in cases when a security may not continue to meet an exchange’s listing standards.
Non-regulatory halts occur when there is a significant imbalance in pending buy and sell orders in a security. Designated Market Makers (DMM) will operate manually and electronically to facilitate price discovery during market openings..." according to the NYSE.
Sometimes the official open of exchange trading on a security will be delayed as the DMM balances the orders on their books, yet the stock may still trade on other electronic communication networks (ECNs) as non-regulatory halts are not shared across exchanges.
Exchange circuit breakers
Stock exchanges can take measures to ease panic selling by invoking circuit breakers and halting trading. As of 2020, if the S&P declines more than 7% by 3:25 p.m. EST, the market pauses for 15 minutes. If the drop exceeds 20% trading is suspended for the remainder of the session.
Example of a Trading Halt in the Real World
On March 16, 2020, as COVID-19 pandemic fears swelled, the S&P 500 continued to drop more than 7% from the prior close just after 9:30 AM EST. This halted trading in US stocks for 15 minutes as a result of a circuit breaker. Orders are not executed during this period, although orders can be placed and canceled. Trading resumed shortly at 9:46 AM.