The default by private Norwegian trader Einar Aas left a 114 million euro ($139 million) hole in the clearing house’s resources, forcing other members of the market to cover the loss within two business days or face default themselves.
Nasdaq Clearing, a Swedish unit of Nasdaq Inc, had also violated EU regulations by investing its own funds in derivative contracts for too long after the default, the regulator said.
“Together with other deficiencies that are presented in this decision, these breaches have created unacceptable risks in Nasdaq Clearing’s operations, which could have had a very serious impact on the financial system,” the FI’s decision said.
Nasdaq said in a statement it had launched a comprehensive programme to strengthen its resilience and robustness immediately after the default, and would analyse the FI’s decision before deciding on any next steps.
The trader’s default was triggered by big fluctuations in market spreads, when power prices in the hydroelectric-dependent region fell due to heavy rain while German power prices spiked due to a rise in the cost of carbon, Nasdaq said at the time.
Einar Aas did not immediately respond to an email seeking comment on the case.
In 2018, Aas said his position in the market had been “too big in relation to the market’s liquidity” and that he risked personal bankruptcy.
Aas later struck deals with his creditors, settling the claims against him.