Trade Resumption

Trade resumption refers to the commencement of trading activities after they have been shut down or halted for some period of time. While the term may sometimes refer to the resumption of trade between nations, the most common usage is in relation to the resumption of open-market trading in a security such as a common stock or even an entire exchange.

Trade resumption occurs after situations when security trading is halted due to material information that needs time to disseminate, or fundamental questions that have been raised about the reliability of previously-released information. Often a trading halt is occurs thanks to anticipation of a news announcement, to correct an order imbalance, or for other regulatory reasons.

According to FINRA, when a trading halt is put into place, the listing exchange alerts the market that trading is suspended for that particular stock, and other markets trading in it also have to comply with the halt.

While it's in effect, brokers are prohibited from trading the stock and from publishing quotations and indications of interest.

Once the suspension ends, trade resumption occurs. But as FINRA explains: "the end of a trading suspension does not mean that quoting and trading automatically start again for (over-the-counter) stocks. Instead, certain requirements in SEC Rule 15c2-11 must be met. A broker must also file a form with FINRA that needs to be approved before quoting can resume.

"The broker can file the form after it obtains and reviews current information about the company, including:

• the company’s organization, operations and certain control affiliates;
  

• the title and class of securities outstanding and being traded; and
  

• the company’s most recent balance sheet and profit and loss and retained earnings statement.
  

"The broker filing the form must have a reasonable basis for believing the information is accurate and that it comes from reliable sources," FINRA added. "A broker generally cannot quote the stock or solicit or recommend the stock to any investor until the form is approved. After approval, the broker can begin quoting—and other brokers may also quote the stock relying, or 'piggybacking,' on the first broker’s quote without filing the form or reviewing the company information on their own."

FINRA notes that SEC’s has a limited ability to continue suspensions, so a trade resumption "does not mean that the SEC’s concerns have been addressed and no longer apply. Investors need to be careful before purchasing a stock after an SEC trading suspension has ended."