Eli5 – What does the halting of certain shares in the market accomplish, especially when the halting is done repeatedly?
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If you are a rational person at a stock exchange, and you notice irrational buying and selling of a certain company or group of companies, it is better to stop them from trading for the day than to allow that to go on and possibly impact other companies. People forget, a stock exchange is a real place, people go to them and talk to other traders and then buy and sell. When that happens people can get panicky and weird. The exchange, itself, is more neutral than the buyers and sellers.
Say you are that company, one of your competitors went out of business but your foundations are solid, the stock price of your company starts to crater and since you fund your business in part by selling shares and reclaiming shares very real cash flow problems can arise in a short amount of time. If they don’t halt the trading, you might miss a bond payment, or a dividend payment, or *something*, and then you look bad, and people start panicking on a new topic. In that case, it is to the benefit of everyone involved to halt the trading until cooler heads prevail.
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