General Securities Sales Supervisor (Series10) Practice Exam

What action should be taken when an order to buy shares is received during a trading halt?

1. The order should be routed to an ECN for execution

2. The order must be returned to the client

3. The order should be entered upon the resumption of trading

4. The order should be entered as a Market On Open (MOO) prior to the next trading session

The correct answer is: The order should be entered upon the resumption of trading

When an order to buy shares is received during a trading halt, it is essential to understand that trading halts occur for several reasons, such as significant news announcements or issues related to the stock's price volatility. During a trading halt, no transactions can occur, and orders cannot be executed until trading resumes. Therefore, the appropriate action is to enter the order upon the resumption of trading. This approach ensures that the order is processed when the market is active again, maintaining fairness for all investors involved. It also helps in avoiding transactions based on outdated or irrelevant information, as the situation may change significantly between the time the order is received and when trading resumes. This method respects market operations and ensures that orders are handled according to the latest market conditions. The other options do not align with standard practices related to trading halts. For instance, routing the order to an ECN would not be viable since ECNs rely on active trading. Returning the order to the client could lead to missed opportunities when the market reopens. While entering it as a Market On Open (MOO) order may seem intuitive, it does not guarantee that the order will be executed at the desired price upon market opening, which could be risky in volatile scenarios. Therefore, entering the