The Financial Conduct Authority has fined the Bank of New York Mellon a record £126m ($186m, €175m) for failing to comply with custody rules.
The markets regulator said on 15 April that the fine was levied on the Bank of New York Mellon's London branch, and on the Bank of New York Mellon International Limited (BNYMIL).
Custody rules ensure the safe custody of assets if a firm goes bust and also ensure those assets can be easily returned to clients.
The bank's London branch and BNYMIL are the third and eighth largest custody banks in the UK respectively and provide custody services jointly to 6,089 UK-based clients.
The FCA, in a statement, added that during the period of their breaches – from 1 November 2007 to 12 August 2013 – the safe custody asset balances held by the London branch and BNYMIL peaked at approximately £1.3tn and £236bn respectively.
As such, both firms are systemically important to the UK market.
Georgina Philippou, acting director of enforcement and market oversight at the FCA said in the statement: "...The Firms' failure to comply with our rules including their failure to adequately record, reconcile and protect safe custody assets was particularly serious given the systemically important nature of the Firms and the fact that safeguarding assets is core to their business.
"Had the Firms become insolvent, the total value of safe custody assets at risk would have been significant. This is compounded by the fact that the breaches took place at a time when there was considerable stress in the market.
"The size of the fine today reflects the value of safe custody assets held by the Firms as well as the seriousness of the failings and the fact that these failings were not identified by the Firms' own compliance monitoring..."
The FCA has fined Barclays twice for client money failings.
The watchdog slapped a £38m fine on the UK lender in September 2014 for putting £16.5bn of client assets at risk, and a £1.13m fine in 2011.
In 2010, the FCA slapped a £33m fine on JPMorgan for mixing up to $23bn in client money with its own funds.