Regulators and exchange officials trying to unravel the cause of last week's Nasdaq Stock Market failure are focusing on an apparently pivotal two-minute period that foretold just how severe the market's problems were about to get, according to people familiar with the discussions.

The period between 10:53 a.m. and 10:55 a.m. in New York on Thursday appears to have been crucial to signaling the coming impact of a connection problem between Nasdaq OMX Group Inc.'s systems and rival electronic market NYSE Arca, the people said.

Officials from Nasdaq and Arca parent NYSE Euronext, as well as the Securities and Exchange Commission, continued through the weekend to review Thursday's three-hour trading halt on Nasdaq, while Nasdaq management including Chief Executive Robert Greifeld provided continuing updates to directors, customers and shareholders of the company, the people said.

The paralysis and confusion that accompanied the halt shined a light on issues involving exchange technology and the vulnerability of systems trying to handle masses of data at lightning-fast speeds.

Stock exchanges have come under widespread scrutiny in the wake of technology-driven failures such as the May 2010 'flash crash' of the stock market and Nasdaq's flubbed Facebook Inc. public offering. Such problems have drawn criticism of exchanges' ability to regulate their own operations.

During the two-minute period up to 10:55 a.m. on Thursday, NYSE Arca officials tried and failed to establish a connection with Nasdaq about 30 times, according to people familiar with the events of that day.

Nasdaq, for its part, was having its own problems regarding its connectivity to Arca, the people said.

What remained unclear Sunday was how that connectivity problem -- which Nasdaq officials privately have called 'unprecedented' -- could have had so catastrophic an effect on Nasdaq's systems that the exchange decided to stop trading in all Nasdaq-listed shares, causing ripples of shutdowns across the market and spreading confusion.

NYSE Arca's technicians at 10:53 a.m. switched to a backup server handling certain Nasdaq securities, a person close to the exchange said, while the exchange's systems tried and failed to reconnect to Nasdaq's data feed over the next two minutes. By 11 a.m. Arca's system appeared to be functioning normally again, but soon afterward Arca again lost its connection to Nasdaq's data feed before finally restoring it at 11:17 a.m., the person said.

After the connection was finally re-established, Nasdaq's computers began to suffer from a capacity overload created by the multiple efforts to connect the two exchanges, a person familiar with the matter said.

Earlier in the summer, Nasdaq had changed a component of the software it uses to operate the 'securities information processor,' which provides a data feed that disseminates key stock-quote and trading information, a person familiar with the matter said. The person said the software change, which was tested following protocols Nasdaq adopted after the Facebook IPO, isn't a focus of Nasdaq officials' attention or believed to be a cause of Thursday's breakdown.

Last Thursday, traders across Wall Street, along with automated systems designed to monitor the flow of trading, sensed deeper problems starting around 11:50 a.m., roughly 20 minutes before Nasdaq revealed it couldn't send out quote information and 25 minutes before it halted trading.

At RBC Global Asset Management in Chicago, traders noticed that quotes to buy Nasdaq-listed stocks were coming in at higher prices than quotes to sell those same stocks, an inversion of the normal order. Prices also seemed to be old, or 'stale' in Wall Street parlance.

At one market-making firm, automated processes started setting off alarms and 'acting weird,' according to a risk manager there. The market-making firm -- which is tasked with providing trade quotes and facilitating trades to ensure fair and orderly markets -- began investigating systems internally. As the minutes ticked by without word from any of the exchanges, staff on some trading desks assumed that their own systems were the cause of the problems.

Four minutes after noon, electronic exchange BATS Global Markets Inc. told investors and traders that its employees were looking into a problem receiving and submitting stock quotes with the main data feed for securities-price updates, while Arca officials noticed a similar problem. Five minutes later, Nasdaq said the same thing.

When Nasdaq announced at 12:14 p.m. it was halting trading across its entire market, traders shot instant messages back and forth to spread the news that Nasdaq-listed stocks were out of commission. 'Everyone was pinging each other, like, here we go again,' said William Nichols, co-head of U.S. equities at Cantor Fitzgerald.

On Wall Street, traders were fielding calls from clients about what was happening and when the stocks would be open. But in most cases, trading desks had few answers to give.

So-called dark pools, private venues run by banks and other firms, also scrambled to respond to Nasdaq's problems.

Credit Suisse Group AG briefly shut down its dark pool, called Crossfinder and one of the industry's biggest, in order to block trading in Nasdaq stocks while allowing trading in stocks listed elsewhere. Crossfinder came back up after about a minute, according to a person familiar with the matter.

Goldman Sachs Group Inc.'s dark pool, Sigma X, shut down for the rest of the afternoon.

By 12:24 p.m., Nasdaq officials determined they had fixed the problem with the data feed and staff began to discuss when stocks could resume trading. They had a new problem, though: With about 2,700 securities frozen, banks and big trading firms feared an abrupt restart could overwhelm their own systems and cripple trading just as the market tried to find its footing, according to people involved in the discussions.

Just before 1 p.m., Nasdaq told traders it planned to reopen trading in its stocks beginning with a five-minute 'quote-only period' that would let banks and brokers re-establish prices for halted stocks. Executives at big stock-trading firms immediately pushed back. Five minutes was far too short a time to set prices for so many stocks, with traders trying to manage hundreds of backlogged orders.

Nasdaq staff got the message but needed to seek permission from the SEC to give firms more time to prepare for the market's reopening. At 2:20 p.m., more than two hours after Nasdaq securities ground to a halt, Nasdaq told traders they could quote prices for 15 minutes before trading kicked off. Prices reappeared at 3:10 p.m., and all trading resumed at 3:25 p.m.

Problems between Nasdaq and NYSE Arca continued even after stocks reopened Thursday afternoon. At 3:37 p.m., Nasdaq notified traders that it had stopped sending orders to Arca. BATS ceased routing orders to Arca a minute later.