Barclays was today hit with a £2.45 million fine by the City watchdog for failing accurately to report more than 50 million share, bond and derivative trades it handled in one year.

The errors were discovered at Barclays Capital, the investment banking arm run by Bob Diamond, after the Financial Services Authority went in to investigate an unrelated insider dealing case.

The FSA said that this was by far the biggest fine it has imposed for such serious weaknesses in internal systems and controls used for reporting trades to it. Firms have to report all trades to the FSA by the end of each working day for it to detect and investigate suspected cases of market abuse.

Alexander Justham, the FSA's director of markets, said: “The penalty is significantly higher than previously imposed for transaction reporting errors. This reflects the serious nature of Barclays' breaches and is a warning to other firms that the FSA will not tolerate inadequate systems and controls.”

He added: “Complete and accurate transaction reports are an essential component of the FSA's market monitoring work. Barclays' reporting failures could have a damaging impact on our ability to detect and investigate suspected market abuse.”

Of the 57.5 million transactions, the FSA found 17 million had not been reported at all, 5.8 million share trades were inaccurate, trade times were incorrect in 24.6 million cases and in 3.8 million cases were not marked as a buy or a sell.

Barclays said that it had co-operated fully with the FSA investigation and no clients had been affected by the errors.