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Nasdaq says software flaw exposed in data flood led to halt

NEW YORK — Nasdaq OMX Group on Thursday provided details about its three-hour trading halt last week, saying a flood of data received from NYSE Arca exposed a software flaw in its conduit for disseminating prices.

The deluge ‘‘vastly exceeded’’ the capacity of a marketwide feed known as the securities industry processor, ‘‘which caused its failure and then revealed a latent flaw in the SIP’s software code.’’

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The report amplified previous statements by Nasdaq about what led it to freeze trading in about 3,300 stocks, on its own platform and on others. The disruption underscored how quickly the integrity of the $20 trillion US market can be subverted as orders to buy and sell shares are matched on more than 50 exchanges and alternative electronic venues.

‘‘Any piece of software, even if it’s run for 100 percent for 10 years, there’s still flaws in it,’’ Nasdaq chief executive Robert Greifeld said. ‘‘Whatever you have, it’s a question of what unique set of circumstances happen to reveal that.’’

Several of the issues that led to the halt were within Nasdaq’s control, the New York-based exchange operator said in the report.

‘‘We are responsible for them, regret them, and intend to take all steps necessary to address them to enhance stability and functionality of the markets,’’ the report said.

Other issues “will require a broader industry-wide effort to resolve.’’

The malfunction began when NYSE Arca sent more than 20 ‘‘connect and disconnect sequences’’ as well as a stream of quotes for inaccurate stock symbols, according to Nasdaq’s summary. At one point, Nasdaq got over 2½ times more data per second than the system’s capacity.

The flaw in the SIP software prevented redundancy that is built into the system from ‘‘failing over cleanly’’ to a backup program, it said.

‘‘That failover, that is our responsibility, and our system did not handle that well,’’ Greifeld said.

The shutdown was the latest in a series of failures to disrupt markets, prompting the Securities and Exchange Commission to push for rules to boost the reliability of the technology. Faulty software caused Nasdaq’s mishandling of Facebook Inc.’s public debut last year.

In a separate message sent to clients Thursday, Nasdaq said that it is developing plans to better communicate with companies listed on its exchange and to identify systems that need improvement after last week’s technical malfunction.

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