A trading halt stops orders from executing in a security, sometimes for minutes and sometimes for hours. The mechanism exists because a market without prices is safer than a market with misleading ones.
News halts buy time for distribution
When a company is about to release material information, its listing exchange can pause trading so the announcement reaches everyone at roughly the same moment.
Without the pause, the news would reach participants unevenly, and those who saw it first would trade against those who had not yet seen it. The halt is an attempt to level that timing.
These halts are requested by the company or imposed by the exchange, and they typically last long enough for the release to circulate and be read rather than merely published.
Volatility halts respond to price, not information
A separate mechanism pauses a stock when its price moves outside a band derived from its own recent trading. Nothing about the company needs to be known for it to trigger.
The purpose is to interrupt a move that may be driven by a malfunctioning algorithm or a thin book rather than by any change in the underlying business.
These pauses are brief by design. They are meant to let quotes reassemble and let human attention arrive, not to prevent the price from moving.
Market-wide circuit breakers work at a different level
Broad declines in a major index can halt trading across US markets entirely, with successively larger moves triggering successively longer pauses and, at the extreme, a close for the day.
Those thresholds are set in advance and published, so participants know what will happen rather than discovering it during a selloff.
The purpose is the same as an individual halt at larger scale: to break the feedback loop in which falling prices trigger selling that pushes prices lower.
Resumption uses an auction, not a restart
Trading does not simply switch back on. Exchanges collect orders during the halt and reopen with an auction that finds a single price clearing the accumulated interest.
That price can be far from the last trade before the halt, because it reflects everything learned during the pause. The halt does not protect anyone from the move.
What it changes is orderliness. The adjustment happens in one measured print rather than through a chain of executions at rapidly worsening prices.
Orders behave unpredictably around a halt
Resting orders are not cancelled by a halt, so an instruction left in the book can participate in the reopening auction at a price the sender never anticipated.
Brokers differ in how they treat orders entered while a security is halted, and some restrict certain order types until continuous trading returns.
The practical consequence is that a halt is not a period of safety. It is a period in which a position cannot be changed while the reasons to change it accumulate.