Swedish regulators have fined Nasdaq’s Nordic clearing business SKr300m ($36m) and issued an official warning for “serious deficiencies” in its operations over a 2018 incident that saw a sole trader blow a €114m hole in the market’s stability fund.

A two-year investigation found there were “obvious and significant deficiencies” in the requirements Nasdaq set for members of its clearing house and its policing of those standards, the country’s financial regulator, Finansinspektionen (FI), said on Wednesday.

The watchdog has been examining the fallout from an incident in September 2018 when sudden, diverging price moves in the German and Nordic power markets went against Einar Aas, then one of Norway’s richest men and one of the biggest traders in European electricity markets.

Mr Aas was unable to maintain his outsized positions. Closing out the trades incurred losses that blew through several of the layers of protection at Nasdaq’s clearing house in Sweden, which is designed to insulate the market from a default.

Clearing houses are crucial institutions in the proper functioning of markets, standing between trades to prevent a default on one side or the other from spreading out to other participants. Policymakers have treated them as vital for stability since the 2008 financial crisis.

Nasdaq’s failures resulted in “unacceptable risks in Nasdaq Clearing’s operations, which could have had a very serious impact on the financial system”, the report said.

The €114m losses were divided between Nasdaq and its mutual default fund, in which the market shares any extreme losses — two-thirds of it was eaten up. The 166 members included banks and energy traders such as Morgan Stanley, UBS and Equinor, Norway’s state oil company.

FI said the losses came in part because Nasdaq had incorrectly calculated how much margin was required, creating a shortfall. Some controls were not in compliance with requirements set out in Mifid II markets regulations, the regulator added.

Nasdaq began a comprehensive programme to strengthen its operations immediately after the incident, which lessened the size of the fine.

It began rebuilding the range of buffers it uses to insulate itself and set aside a further SKr200m of its own funds as a backstop in the clearing house.

“Despite the serious nature of the breaches, there is no reason to assume anything other than that the breaches will not be repeated,” FI added.

Nasdaq said it would “now thoroughly analyse the decision and thereafter decide on any next steps”.

In 2019, the Norwegian markets regulator censured Nasdaq’s commodities exchange in Oslo for supervisory failures relating to the same incident.