What happens in the event of a trading suspension?

Perhaps this has happened to you before: you want to sell a share and discover that the security has been suspended from trading. After the initial shock, uncertainty and anger set in. Why can the share no longer be traded? How long does such a suspension last? Find out here when and why trading is suspended.

Why are securities suspended from trading?

The management of the Frankfurt Stock Exchange suspends the listing of securities if orderly stock exchange trading is temporarily jeopardized or if this appears necessary to protect investors.

In the case of shares, for example, the management can react to important company news, which is usually published in the form of ad hoc announcements. The terms and conditions of the Frankfurt Stock Exchange stipulate "special circumstances relating to the issuer" as a reason for suspending trading. The imminent insolvency of a company can be such a special circumstance. The same applies to significant changes in the earnings situation or an imminent capital increase, etc.

A suspension is intended to give all investors the opportunity to become aware of facts that are important for the valuation of a company. The aim is to achieve symmetry in the dissemination of information to investors.
 

The reasons for a suspension of trading are listed in § 72 of the Exchange Rules for the Frankfurt Stock Exchange. The Exchange Rules of the Frankfurt Stock Exchange refer to the Stock Exchange Act; § 25 deals with the suspension of trading. This article only deals with partial aspects of the suspension of trading. The Exchange Rules of the FWB apply.

How long a share is suspended from trading varies from case to case. As a rule, trading is suspended for one hour. In exceptional cases, it may be longer. We will inform you about current suspensions and resumptions in the announcements of the Frankfurt Stock Exchange.

Which securities are suspended?

All securities admitted to trading on the Frankfurt Stock Exchange can be suspended from trading.

This is also the case for foreign securities, i.e. shares whose home exchange is abroad. Foreign securities are usually suspended on the Frankfurt Stock Exchange because trading is also suspended on their home exchange. The management of the Frankfurt Stock Exchange then merely implements the decision of the foreign home exchange. Investors must obtain information about the reasons for the suspension on the foreign stock exchange from the respective home stock exchange, e.g. the New York Stock Exchange for US shares, or directly from the respective company.

However, foreign securities do not have to be suspended from trading when the domestic market is closed. This is the case on stock exchange holidays, for example. As explained above, the decisive factor is the extent to which orderly trading is possible in Frankfurt.

What happens to my order?

In the event of a temporary or full-day suspension, existing orders are deleted to protect investors.

Particularly in the case of limit orders with a longer validity period, this can lead to investors being unaware of the suspension and wondering why their open order is no longer available. A look at the database with the announcements provides clarity here.

© May 2019, Deutsche Börse AG