According to the regulator, the bank failed to segregate client money from its deposits in its sterling money market over an eight year period.
An investigation found that although the money was initially segregated over night, it was subsequently mixed with BarCap funds during trading hours the next day.
The non-segregated amount increased from Â£6 million in 2002 to Â£387 million in 2009 while the highest amount at risk on any one occasion was Â£752 million.
Margaret Cole, managing director of enforcement and financial crime, said: "BarCap committed a serious breach of FSA client money rules by failing to segregate millions of pounds of its clientsâ money for over eight years. This posed a significant risk and the penalty reflects the amount of client money involved in this breach.
"The FSA has repeatedly emphasised the importance of ensuring that client money is adequately protected and in the past year has taken enforcement action against firms of all sizes for breaches of its client money rules.â
Meanwhile, the retail division of Barclays bank is reportedly looking to cut up to 1,000 jobs as part of a restructuring of its branches.
By Jim Ottewill