On Thursday afternoon, Nasdaq OMX offered an update on its internal review of the events leading to three-hour halt in trading on Aug. 22. It emphasized that high speed trading was not the cause.

The preliminary internal review identified a combined series of technology-related events that caused the initial market problems and extended the shutdown.

“A number of these issues were clearly within the control of Nasdaq OMX,” the exchange wrote. “As the Securities Information Processor (SIP) for Nasdaq stocks, 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.”

Other issues contributing to the halt “are more endemic to technology issues across today's complex markets and will require a broader industry-wide effort to resolve,” it wrote.

Nasdaq is currently reviewing potential design changes to further strengthen the SIP's resiliency, including architectural improvements, information security, disaster recovery plans and capacity parameters. It plans to release initial recommendations within 30 days. It is also undertaking what it says will be “a comprehensive review of the policies and procedures for communicating with customers, market participants and the broader public during market-wide events.”

Nasdaq halted trading on August 22 after the SIP could not process quotes. “The catalyst for the failure was a confluence of unprecedented events that overwhelmed the processing capacity,” it wrote, adding that “high frequency trading played no role.”

The problem was apparently caused by heavier than expected volume. The SIP system was capable of handling approximately 500,000 messages per second across 50 of the SIP system's ports, for an average peak of approximately 10,000 messages per-port, per second. On the morning of Aug. 22, there was “an unprecedented volume of message traffic,” 26 times greater than the average per-port, per-second activity. The overload revealed a latent flaw in the SIP's software code.

A rival exchange was also blamed. Available capacity was further eroded, Nasdaq claims, as the SIP was flooded by traffic and a stream of inaccurate symbols and generated quote rejects from NYSE Arca,” an all-electronic exchange owned by the parent company of the New York Stock Exchange.

Although the problem was quickly identified and data feeds were operational within 30 minutes of the trading halt, additional time was required to consult with market participants, and to test and evaluate scenarios needed to re-open the market.

“Our performance is unacceptable to our members, issuers and the investing public,” Nasdaq wrote in its statement.

As the exchange continues its review, the Securities and Exchange Commission is also demanding answers and in the midst of its own investigation.

SEC Chairman Mary Jo White has scheduled a Sept. 12 meeting with the heads of exchanges and other major market participants to discuss the trading halt and the overall stability of the marketplace.

The interruption in trading “should reinforce our collective commitment to addressing technological vulnerabilities of exchanges and other market participants,” she said in a statement.

White pledged to advance rules that the SEC proposed earlier this year “regarding new standards for the trading and other systems that are central to the integrity of our markets.”

Those standards, bundled under the proposed Regulation SCI (the acronym for stands for “systems, compliance and integrity”) would require “entities essential to the smooth functioning of the U.S. securities markets,” including exchanges and clearing houses, to have comprehensive policies and procedures in place to maintain and secure their technology. It would require that systems have adequate capacity, integrity, resiliency, availability, and security. It will demand that they be well-positioned to promptly take corrective action when problems arise.