The Nasdaq electronic billboard in New York's Times Square

The Nasdaq OMX Group has said it will investigate a technical glitch at the Nasdaq stock exchange which stalled trading for almost three hours.

Nasdaq, the world's largest electronic stock market, suspended trading in all listed securities at 12:14 EST (17:14 BST) due to a technical issue. It said that it had identified the cause of the problem and fixed it.

"NASDAQ OMX became aware that price quotes were not being disseminated by the Securities Information Processor (SIP), which consolidates and disseminates all prices for the industry," the stock exchange's operator said in a statement.

"There was a connectivity issue between an exchange participant and the SIP, which led to degradation in the ability of the SIP to disseminate consolidated quotes and trades. The cause of the issue has been identified and addressed."

In the first 30 minutes of the stoppage, technical issues with the SIP were resolved, Nasdaq said. During the remaining period, the group coordinated with other exchanges, regulators and market participants to ensure a smooth reopening of trading.

Operations resumed at 15:25 EST and the rest of the trading day ended smoothly, according to the group. The benchmark Nasdaq index closed at 3,102, up 1%.

"NASDAQ OMX will work with other exchanges that are members of the SIP to investigate the issues of today, and we will support any necessary steps to enhance the platform," officials added.

SEC Response

Following the incident, the US Securities and Exchange Commission (SEC) chair, Mary White said she would convene a meeting of the leaders of the exchanges and other major market participants to discuss the problem and strengthen ongoing efforts to make stock markets flawless.

"Today's interruption in trading, while resolved before the end of the day, was nonetheless serious and should reinforce our collective commitment to addressing technological vulnerabilities of exchanges and other market participants," she said.

"The Commission is determined to enhance the safeguards necessary for strong market systems. As one step, I will work to advance rules that the Commission proposed earlier this year regarding new standards for the trading and other systems that are central to the integrity of our markets."

Earlier Glitches at Stock Markets

Trading on Nasdaq was delayed last year in connection with the listing and trading debut of social network site Facebook.

Regulators accused Nasdaq, the second-largest stock exchange in the US, of disrupting the internet giant's floatation with its faulty systems and decisions. It settled the charges with a $10m (£6.4m, €7.5m) fine and paid out $62m to investment firms in compensation for their losses.

Nasdaq's rival, the New York Stock Exchange, had earlier faced similar problems due to software malfunction at Knight Capital which led to huge price variations in stocks.