Posted in Finance, Accounting and Economics Terms, Total Reads: 207
Definition: Halted Issue
Temporarily stopping the trading of the listed stocks of an issuer, which may have been imposed by the Exchange Board, its agent (Market Regulation Services Inc. (RS)) if talking in the context of US markets, or the issuer itself requests to be done so. Normally an issuer's traded stocks are paused depending on a public notice of high value information about the issuer, on the other hand the Exchange Board or the RS may also come up with a pause if the issuer is not following the guidelines laid out by the Exchange or if the Exchange decides that it is in the interest of the public to do so.
A halted issue can also be related to an initial public offering (IPO) that would not be allowed to take place, or a bond issue that has been halted, taking along any other type of stock offering that does not carry forward as expected earlier. Although an issue may be paused for several of reasons, a halted issue is most commonly the consequence of an event which is unexpected and the market believes would have negative effects on the issuer.
For example, an organization that is planning to issue a corporate bond at a given rate may have to halt the issue in the scenario of its bond rating being reduced, leading to a dramatic fall in the interest for the bond, to the extent where the bond issue is no longer meaningful. When an IPO is stopped or halted, the company may see that the capital markets are not generous on other recent held IPOs within its own industry vertical and therefore may decide to halt the issue at that point in time.