Please find the following sample which demonstrates the Nested iterator.

The following is the source of the configuration.

<?xml version="1.0" encoding="UTF-8"?>
<definitions xmlns="http://ws.apache.org/ns/synapse">
    <registry provider="org.wso2.carbon.mediation.registry.WSO2Registry">
        <parameter name="cachableDuration">15000</parameter>
    </registry>
    <sequence name="IterateMediatorSequence">
        <iterate xmlns:ns="http://org.apache.synapse/xsd" xmlns:ns3="http://org.apache.synapse/xsd" xmlns:m0="http://services.samples" id="iterate1" preservePayload="true" attachPath="//m0:getQuotes" expression="//m0:getQuotes/m0:getQuote">
            <target>
                <sequence>
                    <log level="full">
                        <property name="target1" value="************After 1st Iterate before 2nd Iterate*************"/>
                    </log>
                    <iterate id="iterate2" preservePayload="true" attachPath="//m0:getQuote" expression="//m0:getQuotes/m0:getQuote/m0:request">
                        <target>
                            <sequence>
                                <log level="full">
                                    <property name="target2333" value="************After 2nd Iterate and before payload factory*************"/>
                                </log>
                                <payloadFactory>
                                    <format>
                                        <m0:getQuote>
                                            <m0:request>
                                                <m0:symbol>$1</m0:symbol>
                                            </m0:request>
                                        </m0:getQuote>
                                    </format>
                                    <args>
                                        <arg expression="//m0:getQuote/m0:request/m0:symbol"/>
                                    </args>
                                </payloadFactory>
                                <log level="full">
                                    <property name="target1" value="************after payload factory*************"/>
                                </log>
                                <send>
                                    <endpoint>
                                        <address uri="http://localhost:9001/services/SimpleStockQuoteService"/>
                                    </endpoint>
                                </send>
                            </sequence>
                        </target>
                    </iterate>
                </sequence>
            </target>
        </iterate>
    </sequence>
    <sequence name="aggregateMessages">
        <aggregate id="iterate2">
            <completeCondition>
                <messageCount min="-1" max="-1"/>
            </completeCondition>
            <onComplete xmlns:ns="http://org.apache.synapse/xsd" xmlns:ns3="http://org.apache.synapse/xsd" xmlns:m0="http://services.samples" expression="//m0:getQuoteResponse">
                <log level="full"/>
                <aggregate id="iterate1">
                    <completeCondition>
                        <messageCount min="-1" max="-1"/>
                    </completeCondition>
                    <onComplete expression="//m0:getQuoteResponse">
                        <send/>
                    </onComplete>
                </aggregate>
            </onComplete>
        </aggregate>
    </sequence>
    <sequence name="fault">
        <log level="full">
            <property name="MESSAGE" value="Executing default 'fault' sequence"/>
            <property name="ERROR_CODE" expression="get-property('ERROR_CODE')"/>
            <property name="ERROR_MESSAGE" expression="get-property('ERROR_MESSAGE')"/>
        </log>
        <drop/>
    </sequence>
    <sequence name="main">
        <in>
            <sequence key="IterateMediatorSequence"/>
        </in>
        <out>
            <sequence key="aggregateMessages"/>
        </out>
    </sequence>
</definitions> 

Use the following request with soapui in order to test the above sample.

<?xml version='1.0' encoding='utf-8'?>
<soapenv:Envelope xmlns:soapenv="http://schemas.xmlsoap.org/soap/envelope/">
<soapenv:Body>
 <m0:getQuotes xmlns:m0="http://services.samples">
<m0:getQuote>
<m0:request>
<m0:symbol>SUN9</m0:symbol>
</m0:request>
<m0:request>
<m0:symbol>SUN10</m0:symbol>
</m0:request>
</m0:getQuote>
</m0:getQuotes>
</soapenv:Body>
</soapenv:Envelope>

From the second iterate mediator, messages retrieved from the first iterator are again iterated into smaller messages as below

<?xml version='1.0' encoding='utf-8'?>
<soapenv:Envelope xmlns:soapenv="http://schemas.xmlsoap.org/soap/envelope/">
<soapenv:Body>
<m0:getQuote xmlns:m0="http://services.samples">
<m0:request>
<m0:symbol>SUN10</m0:symbol>
</m0:request>
</m0:getQuote>
</soapenv:Body>
</soapenv:Envelope>