The FSA has hit bank Toronto Dominion's London branch with a £7m fine for repeated failings, the fourth highest fine on record.
The fine, the bank's second fine for the same offence, follows systems and controls failings around the pricing of financial products which forced the bank to make a negative adjustment of CAD$96m in July 2008.
Pricing irregularities were uncovered on a proprietary trader's books within Toronto Dominion's Credit Products Group.
The FSA also found the bank failed to ensure the trader's books were independently checked, and did not have adequate controls in place which could have detected the pricing issues.
In November 2007, the regulator fined Toronto Dominion £490,000 when fixed income trader Simon Brignall created false values for his trading positions, hiding significant losses by creating non-existant trades.
Margaret Cole, FSA director of enforcement and financial crime, says: "This is one of our largest fines and it underlines the seriousness with which the FSA views repeat offences.
"Toronto Dominion clearly failed to apply proper controls in this area despite its previous sanction and repeat offenders need to know that they will face severe consequences.
"It is important that firms trading in sophisticated and often illiquid financial products have robust controls in place, particularly in times of increased market volatility. Where a firm doesn't do this the FSA will take action."
The bank's co-operation with the investigation and an early settlement cut the fine from £10m.
A review of the bank's control processes by senior management is underway.
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