Britain’s financial regulator banned a former Merrill Lynch proprietary trader after he deliberately mis-marked positions to avoid showing increasing losses, forcing the bank to make a $456m writedown.

The FSA said Alexis Stenfors, a former proprietary trader at Merrill Lynch International Bank (MLIB), now part of Bank of America Corp, was barred from any function “in relation to any regulated activity”.

Stenfors, a former senior trader on the short-term interest rate trading desk of the bank’s London branch, mis-marked positions he traded between mid-January 2009 and mid-February 2009 by around $100m.

The FSA said the actions forced MLIB to make a “negative adjustment” of $456m to its books and records.

“Market confidence is likely to be damaged by sudden and unexpected writedowns and revaluations of securities. Financial instruments must be priced correctly by traders, particularly in more challenging conditions and when it comes to illiquid products,” Margaret Cole, the FSA’s head of enforcement and financial crime, said.

“(Stenfors) was a senior and experienced trader who held a position of trust at the firm. He betrayed the trust placed in him by the firm and demonstrated that he is not fit and proper to be approved by the FSA.”

The regulator, however, said Stenfors’ cooperation and his agreement to settle at an early stage meant the FSA could revoke his prohibition order after five years.