Swedish Financial Watchdog Fines Nasdaq $36 Million over 2018 Trader Default

Sweden’s financial supervisory authority Finansinspektionen announced on Wednesday that it has issued an administrative fine worth 300 million Swedish crowns ($36 million) against Nasdaq Clearing due to “serious deficiencies” in its operations following the prominent Norwegian speculator Einar Aas default in 2018.

According to the financial watchdog, the move follows an inquiry into the faulty bet that Aas made on the differential between Nordic and German power prices.

The tremendous loss forced Nasdaq’s clearing house to sell positions and withdraw capital from the default fund containing the contributions of all clearing members.

“The requirements the firm placed on the clearing members’ financial and operational capacity were insufficient,” the financial watchdog said.

The default became massive that it left a 114 million euro ($139 million) hole in the stability fund of the Nasdaq Commodities exchange.

The Swedish regulator said that Nasdaq Clearing violated the EU regulations “which resulted in prohibited exposures to credit and market risks.”

“The breaches also resulted in unacceptable risks in Nasdaq Clearing’s operations, which could have had a very serious impact on the financial system,” it added in its report.

In a statement, Nasdaq said that it began implementing a comprehensive program to strengthen its operations immediately after the energy market incident that occurred in September 2018.

Nasdaq said that it would start thoroughly analyzing the Swedish regulator’s decision and “thereafter decide on any next steps”.

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