What is trade resumption’
Trade resumption refers to the beginning of trading activities after they were closed or stopped for a certain period of time. Although the term can sometimes mean a resumption of trade between countries, most often used in relation to the resumption of open market trading in a security such as common stock or even the whole exchange.
Breaking down the ‘trade resumption’
Trade resumption occurs after a situation when the security trading is stopped due to information that it takes time to disseminate, or fundamental questions about the reliability of previously released information. Often a shopping stop occurs due to anticipation of the news announcement, to correct the imbalance, or for other regulatory reasons.
Trade resume before and after
According to the United States, if trading halt is put in place, in the listing of the exchange market signals that trading is suspended for this particular action, and other markets must also comply with to stop.
While it is in effect, brokers are prohibited from trading shares and to publish quotes and expression of interest.
After the ending the suspension, resumption of trading takes place. But as the United States explains: “in the end of a trading suspension does not mean that quoting and trading automatically start again (OTC) stock market. Instead, certain requirements in sec rule 15c2-11 must be completed. The broker must also file a form with finra, which must be approved before Quoting can resume.
“The broker can submit the form once it receives and reviews relevant information about the company, including:
the organization of the company, operations and certain control affiliates;
the title and class of securities outstanding and is traded; and
the company’s latest balance sheet and statement of profit and loss and the report retained earnings.
“Broker filling out the form must have reasonable grounds to believe that the information is accurate and that it comes from reliable sources,” license finra added. “The broker usually can’t quote the warehouse or to request or recommend the stock to any investor until the form is approved. Upon approval, the broker can begin the quoting and other brokers may also Quote the stock relying, or ‘combination,’ and the quote from the first broker without filing the form or reviewing the information.”
The US notes that the SEC has limited capacity to continue the suspension, so the resumption of trade “does not mean that the concerns of the SEC, have been addressed and no longer apply. Investors should be careful before buying the stock after an sec trading suspension has ended”.