When a security is stopped from being traded for an extended period due to lack of adequate financial information on it, then it is known as trading suspension. Trading of shares on the suspended security is not possible, till the suspension lapses or is lifted. The trading suspension for any security is not a blanket ban but determined as per every individual security profile.
Reasons for trading suspension to take place:
- Trading suspension for any publicly listed/ traded company is usually done, when the company has important information ready for press release which may affect its stocks considerably. The temporary suspension of trading in the company’s shares in the exchange gives time enough for the investors to assess the impact of the news on its stocks and plan accordingly.
- Another reason for trading suspension to take place is when any security ready for trading does not meet the exchange market’s ‘listing’ standards. When there is no proper, reliable, and current publicly available information on the financial status of a publicly listed company or security then, trading is suspended for the same. The exchange issues a notice of the suspension listing the reasons till adequate information is available on the same.
- When the exchange decides to suspend trading of a security, it also could be to get some order and fair dealing in the market, to avoid insider trading and make all relevant information available in the public domain. Trading suspension happens when a public listed company breaches the ‘listing rules’ and unusual movement in the trading volume and prices of a particular set of stocks is noticed.
- Online trading and marketing companies like the Millionaire Blueprint which have automated robot to perform trading in binary options, do not have belief in the common perception that markets are random and trading success happens mostly by chance.
- Careful observation of the trends in these automated software investment services may be helpful in predicting whether trading suspension might take place of a particular security and if so for how long a period the stocks may be off the markets. Automation in apps like the Millionaire Blueprint may reveal established price patterns and hence suitable for predicting trends.
The time limit of a trade suspension varies as per the individual security. The general investors who have purchased stocks prior to suspension, must wait till the suspension is lifted. Therefore, it is necessary to understand the trends and verify the financial position of a company before dealing in its stocks.