The Wall Street regulator says that from October 2001 through to July 2005, Brut's trade execution reports contained "critical errors".

In a statement, NASD says Brut's reports didn't include the full size of certain orders and the incorrect treatment of these orders "impacted Brut's reported order size, reduced the order execution time, and increased the number of covered orders".

The NASD says some of Brut's errors may have made some execution-quality statistics look better than was actually the case, while other errors may have caused some statistics to look worse than was actually the case.

Stephen Luparello, senior EVP, NASD, says: "Brut's inaccurate reports compromised the ability of the investing public and other market participants to accurately assess execution quality and compare venues for execution."

Other violations also included backing away from posted quotes, inadequate supervision and failure to retain e-mails, deficiencies in Brut's Order Audit Trail System (Oats) and inadequate supervision.

Brut has neither admitted nor denied the charges, but consented to the entry of NASD's findings. In addition to paying the fine, Brut has agreed to revise its written supervisory procedures within 30 days.

Nasdaq, which acquired the Brut ECN in September 2004 from SunGard, received SEC approval last month to integrate its Market Center, Brut and Inet automated execution systems.

The integration of the three platforms will create a single book of liquidity, resulting in increased order interaction, execution speed and fill rates, says Nasdaq.