Updates with IBHK's response in paragraph 6

April 28 (Reuters) - Hong Kong's licensing authority said on Monday it had fined U.S.-based Interactive Brokers Group's IBKR.O local unit HK$4.2 million ($541,453.42) for erroneously loaning its clients' securities to other investors without valid authorization.

The Securities and Futures Commission $(SFC.AU)$ said its investigation found that the failure happened between December 3, 2017 and October 23, 2020, under which the loaned client securities had an aggregate market value of HK$586 billion.

On or around October 27, 2020, IBHK became aware that renewal notices were not sent to any of its clients since December 2017 due to a programming error following an update, the SFC said.

However, its clients did not suffer any loss from the incident, the company told the agency.

The regulator also said IBHK had implemented further remedial actions related to the incident, including distribution of renewal notices to clients every 11 months.

IBHK, in an emailed response to Reuters, said it has fully cooperated with the SFC's investigation and has taken a number of remedial actions to prevent a similar incident from happening again.

($1 = 7.7569 Hong Kong dollars)

(Reporting by Shivangi Lahiri in Bengaluru, Additional reporting by Sneha Kumar; Editing by Leroy Leo)

((Shivangi.Lahiri@thomsonreuters.com;))