A trader who misstated his positions by more than $100 million was banned from the City today for at least five years by the Financial Services Authority.

Alexis Stenfors, a former senior trader on the short-term interest rate trading desk of Merrill Lynch International Bank (MLIB), was banned on the ground that he is “not a fit and proper person”.

The regulator said that Mr Stenfors, 39, had deliberately mismarked the positions he traded on behalf of MLIB between mid-January 2009 and mid-February 2009 to avoid showing increasing losses in his books.

It said that, when they were uncovered, these actions had caused MLIB to make a negative adjustment of $456 million to its books and records.

His actions were uncovered only on February 17 last year when Mr Stenfors was on holiday and managers began to ask about the value of his positions. Later that day, Mr Stenfors contacted his managers to admit that he had been mismarking his positions. He was immediately suspended and dismissed by the bank on June 24.

The FSA said that Mr Stenfors had admitted deliberately mismarking his positions during the period because he knew that the market was moving against him and had wanted to avoid showing increasing losses.

It said that, because he had co-operated fully with the FSA and with MLIB and had expressed remorse for his actions, it was minded to revoke the ban after five years — provided there was no new evidence that Mr Stenfors was not fit and proper.

The regulator said that Mr Stenfors had maintained that his conduct was partly explained by “an enormous workload and a prolonged lack of holiday” that had contributed to him being “mentally exhausted”.

However, it argued that Mr Stenfors was a senior and experienced trader who had not alerted his managers to the difficulties he had been having.

Margaret Cole, the FSA’s director of enforcement and financial crime, said: “Stenfors's actions in deliberately mismarking his positions fell far short of the FSA’s expectations. 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.

“We have banned Stenfors because his misconduct was deliberate, frequent and repeated over a one-month period. He 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.”