Trading halt

The suspension of trading is an action on a market to which the trade at least a security is to be prevented.

Proponents see in the suspension of trading in securities of individual companies protection of investors. So the trade is with a company's shares suspended if this company has to make mandatory disclosures that may have a significant influence on the course, such as bankruptcy filings or merger of a company. For this purpose, the supervisory bodies to get the compulsory notification before publication and may suspend trading before the message is known.

Critics of Suspensions of Trading a contradiction to the idea of economic liberalism, as there should be free of influencing markets. Often the trade of a particular security or equal to all securities on a stock exchange is suspended. The reason for this is that when prices rise securities are purchased, thus the price increases even more, and to be sold when prices are falling securities, bringing the price even further falls. De facto incapacitated because they are dependent on the stock exchange in the smaller market participants. The larger OTC market participants can continue to trade with each other.

Trading suspensions are not limited to shares, but could extend to all tradable, so also on money. Thus so-called bank holidays were proclaimed in 2002, both in Argentina and Uruguay. Effectively trade with money that lifting and Transfer has been suspended. Even in these cases was the "stabilization" of the currency the target. ( In reality, the money had already suffered a great loss in value, the bank holidays are therefore only proclaimed for the sake of appearances of the value of money. ) Longer- term suspension of trading in the only generally accepted medium of exchange, a country has fatal consequences for the division of labor economy: Without medium of exchange is the division of labor to a halt. Usually such circumstances, a general impoverishment.

Also in Germany were such " bank holidays " possible, both in shares and in cash: To say:

• Banking Act § 46a. " [ ... ] So the Federal Supervisory Office [ ... ] may order the closure of the financial institution for the marketing of the customer".
• Banking Law § 47. " [ ... ] So the federal government can [ ... ] direct that credit institutions remain temporarily closed to traffic with their customers, and payments and transfers paid in customer traffic nor be able to accept ."

The real causes of the above suspensions of trading in money lay in the respective financial crisis, ie in more fundamental reasons than just a self-acceleration of rate changes. Has some real value, so its owner will not sell it below this value. A buyer is the other way around do not spend more for it than it is worth. Following this theory trading suspensions are unnecessary, they are rather manipulations of the market in favor of a restricted group at the expense of mostly much larger group.