What happens when I sell short a security and the stock is halted before I can cover my position?

When a stock is halted, it means that trading is suspended by the regulatory bodies overseeing the exchanges and marketplaces. This may occur for a variety of reasons including, pending news, regulatory investigation, corporate restructure, or activation of the Limit Up Limit Down rule.

If a stock is halted only for a brief period during the day, your open short position can be covered when trading resumes.

However, if a stock is halted for an extended period of time and you cannot cover the open short position before the close of after-hours trading at 8pm Eastern Time, you will be responsible to pay any overnight borrow costs, margin costs and any other fees incurred daily until the stock resumes trading and the position can be covered or until the Depository Trust Company (DTC) delists the security.

You are fully responsible to ensure that your TradeZero account maintains sufficient equity to be able to cover these charges.

A trading halt may result in any of the following:

• Request to deposit additional funds;
• TZC’s Auto Risk Monitoring procedures may automatically send an order to cover any open positions to bring the account back to a sufficient equity level;
• Restriction on withdrawing funds; or
• Account status changed to Liquidate Only (LO) and no new opening trades can take place.

For more information on trading halts see: https://www.finra.org/investors/investing/investment-products/stocks/trading-halts-delays-suspensions