Merrill Lynch has been fined £34.5 million for failing to report 68.5 million transactions, the Financial Conduct Authority (FCA) has said.
The fine was reduced from £49.3 million after Merrill Lynch International agreed to settle at an early stage of the investigation, the watchdog said.
The FCA said the failure to report the exchange trade derivative transactions took place between February 2014 and February 2016.
They explained that exchange traded derivative transactions have to be recorded as they allow authorities to assess and address the risk inherent in financial systems caused by a lack of transparency.
The reporting requirement was one of the key reforms introduced following the financial crisis in 2008 to improve transparency within financial markets.
Mark Steward, FCA Executive Director of Enforcement and Market Oversight said:
“Effective market oversight depends on accurate and timely reporting of transactions...
“It is vital that reporting firms ensure their transaction reporting systems are tested as fit for purpose, adequately resourced and perform properly.
"There needs to be a line in the sand.
"We will continue to take appropriate action against any firm that fails to meet requirements.”
The fining of Merrill Lynch is the first enforcement action against a firm for failing to report details of trading in exchange traded derivatives, under the European Markets Infrastructure Regulation (EMIR), the FCA said.
Bank of America Merrill Lynch said in a statement that it had self-reported the issue to the UK watchdog, and assured that none of its clients have taken a financial hit.
"We are wholly committed to complying with all applicable regulatory requirements.
"When we discovered that certain trades had not been fully reported to a trade repository, as required following the introduction of EMIR, we immediately reported the matter to the FCA.
"We have re-evaluated and improved our related processes and can confirm that no clients were financially impacted as a result."