Morgan Stanley has been fined $18.5m by Hong Kong officials for not disclosing thousands of short selling orders and concerns over conflicts of interest between its principle and agency trading desks.

Between January and November 2014, the investment bank failed to report relevant information on nearly 30,000 short sales, the Securities and Futures Commission (SFC) said in a statement.

Specifically, the firm’s Hong Kong inventory management systems allowed stock positions based on borrowed stock to be re-characterised as long stock positions when the positions were moved across certain internal accounts.

According to Morgan Stanley estimates, approximately 29,000 orders sent to the HKEx for execution were affected.

The SFC investigations also found that traders within Morgan Stanley’s Hong Kong traders responsible for agency execution also traded the stocks contained in the client’s basket order on a principal basis.

Morgan Stanley’s policies and procedures did not strictly forbid traders to trade on a principal basis against or in the same direction as the client orders. The inherent conflict was left to the trader to manage.

It was not until October 2014 that the agency execution function of MSHK and principal trading activities were separated.

Position limits were also beached, which resulted in one stock option contract exceeding the limit by more than 300 contracts on a trading day in February 2015.

Large open positions of two of its affiliate companies to the exchange between December 2010 and December 2015.

Morgan Stanley also failed to follow the instruction of an asset manager to report large open positions on a delegated basis from June 2012 to March 2016.

The bank has agreed to hire an independent reviewer to conduct a review of its internal controls, the SFC added.