Trading Halts: Limit Up/Limit Down

Trading of stocks and exchange-traded products can be temporarily paused (or halted) for a variety of reasons, such as an upcoming news announcement, to correct an order imbalance, or suspected unusual activity related to a stock's price. In addition, under Securities and Exchange Commission (SEC) regulations trading will be paused for any stock if certain conditions (outlined below) are met during periods of high volatility.

What is Limit Up/Limit Down

The “limit up, limit down” (LU/LD) SEC regulation replaced the single stock circuit breaker in which trading was halted when stocks increased or decreased 10 percent in a rolling five-minute window.

Limit Up/Limit Down Implementation

Limit up, limit down rules will take effect in two phases: the first begins April 8, 2013, and the second on Aug. 1, 2013. It will cover all stocks except OTC, Bulletin Board, Pink Sheet and Grey Sheet securities.

Limit Up/Limit Down Explained

Below we will explain the details of limit up, limit down rules, including how phase one of LU/LD implementation will impact equity trades and options trades.

Reference Price

Every security will have a reference price, which usually will start with the opening price of a stock. After that, the reference price will be roughly equal to the mean price of the security over the preceding five minutes, and will be adjusted every 30 seconds if there is a 1 percent increase or decrease in the price.

Price Band and Limit State

Every security will have a price band with the reference price as the mid-point. If an offer reaches the lower quote band or a bid reaches the upper quote band that stock will enter a limit state for 15 seconds. A limit state can end in several ways:

  • If a trade is made for the order that priced the security into the limit state.
  • The order creating the limit state is cancelled or modified so that it is no longer sitting on one of the bands.
  • If the band changes so that the price is no longer sitting on the upper or lower band.

Stock Halt: Limit Up/Limit Down Straddle State

Trading in a stock will be paused for a minimum of five minutes, if the national best bid and offer (NBBO) price matches one of the upper or lower band limits for 15 seconds. A primary stock exchange can add another five minutes to the pause if necessary. The exchange also can halt trading at its discretion, if an NBBO price lies outside of the band limit. This is known as the straddle state. Under LU/LD if the national best bid (NBB) is priced below the lower band it will be non-executable. If the national best offer (NBO) is priced above the upper band it will be non-executable. Quotes outside the bands cannot be transacted against.

The price bands are variable, based on three factors: type of security, price of security, and time of day.

Type and Price of Security

1) Tier One Securities: All securities belonging to the S&P 500 or the Russell 1000 indexes. In addition, Tier One includes all exchange-traded products that average at least $2 million a day in daily trading.

  • Greater than $3 per share = 5 percent above and below the reference price
  • Priced from $0.75 to $3 = 20 percent above and below the reference price.
  • Less than $0.75 = the lesser of a) $0.15 or b) 75 percent.

2) Tier Two Securities: All other national market securities, including rights and warrants, and smaller ETP products.

  • Greater than $3 share = 10 percent above or below the reference price.
  • Priced from $0.75 to $3 = 20 percent above or below the reference price.
  • Less than $0.75 = the lesser of a) $0.15 or b) 75 percent.
  • A leveraged exchange-traded product will have its percentage multiplied by the leverage ratio of such product. For example, a 2X exchange-traded fund priced at $10 a share would have a 20 percent parameter (10 percent X 2).

Time of Day

  • During the first 15 minutes of trading, price bands are double-wide.
  • During the last 25 minutes of trading, price bands are double-wide.

Phase One Trading Pause

During the first phase, from April 4, 2013, to Aug. 1, 2013, no trading pause can go into effect in the first 15 minutes and the final 25 minutes of a trading day.

How to Know if a Stock is Halted

You will know if a stock is halted because you will see *H after the symbol on ScottradeELITE. For example, if trading is halted on stock XYZ, you will see the symbol appear as XYZ*H.

Limit Move Examples

  • Company A, an S&P 500 stock, has a reference price of $100 a share, so its price band is $95 to $105. The exchange offer price is $95, which equals on the lower band. If that price remains in effect for at least 15 seconds, trading will be paused for at least five minutes.
  • Company B, has a reference price of $2.50 per share and is neither part of the S&P 500 nor the Russell 1000. At 9:35 eastern time, its price band ranges from $1.50 per share to $3.50 per share because its normal 20 percent parameter has been doubled to 40 percent. Exchange bids at $3.50 or exchange offers at $1.50 would trigger a limit state. If that limit state is not resolved within the 15 seconds stock trading will halt.

Entering/Modifying Orders During a Trading Pause

  • You may enter, modify and cancel orders during a halt or trading pause. However, trade orders will not be executed until trading resumes.
  • Orders can only be entered online, if at least two of the following three pieces of quote information are available: bid, ask, and last prices.
  • To cancel a market order during market hours, please call your local Scottrade branch office.
  • Be careful when entering trade orders during a halt or trading pause, as the stock may resume trading at a significantly higher or lower share price.

Repricing of Trade Orders

Under the Limit Up/Limit Down rule there are scenarios where a buy or sell order could be repriced from the terms of the original trade order.

  • If an equity market order enters the market and the available liquidity to effect a transaction is outside the price bands, then the equity market order will reprice to the upper or lower price band.
  • Equity limit orders priced outside the price band that are not transacted up to the price band will be repriced to the upper/lower band limit price.

Repriced orders will not show as repriced in your “Open Orders” window.

LU/LD Options Trading Rules

The following LU/LD rules apply to options trades:

  • When the underlying security goes into a limit or straddle state any market order entered at that time will not interact within the market until the limit/straddle state is resolved.
  • Stop orders with an exchange will not be allowed to trigger (or become an executable market order) during a limit or straddle state.
  • Limit and stop limit orders with an exchange will continue to be executed in the limit and straddle state.
  • No trading will occur when the underlying stock is halted.

How You'll Know When an LU/LD Trading Halt Occurs

From any of Scottrade's platforms, you'll be able to see when a Limit Up/Limit Down trading halt is applied to a security in three places:

  1. Your Watch Lists
  2. From a Detailed Quote
  3. At Order Entry

If a security is currently halted because it's trading outside its price bands, you'll see a small yellow box next to that security. The letters inside the yellow box indicate why the security is halted:

  • a ‘B' indicates that a security is non-executable because the BID is outside the price band
  • an ‘A' indicates that a security is non-executable because the ASK is outside the price band
  • A ‘B/A' indicates that the BID and ASK are non-executable

To see more information on LU/LD trading halts, you configure your watch lists to show the upper and lower price bands for a security using the configure settings on Scottrader® Streaming Quotes and ScottradeELITE® or the Edit Watch List feature in the Scottrade® client website.

The images below show how LU/LD trading halts are communicated across our different platforms.

Scottrade® Client Website


Order Entry

Scottrader® Streaming Quotes

Stock Lists

Detailed Quotes


Watch List

Detailed Quote

Order Entry

For details on how trade halts or limit moves will affect your online equity and options trades, contact your local Scottrade branch office.