Financial Regulation Risk Disclosure

HSBC Markets Hong Kong SFC Best Execution disclosure

SFC-licensed and registered persons are required under the SFC's Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (paragraph 3.2), when acting for or with clients, to execute client transactions on the best available terms (the "best execution" obligation).

On 30 January 2018 the SFC issued a “Circular to licensed corporations on best execution” together with a “Report on the Thematic Review of Best Execution”, in which the SFC provided guidance on the best execution obligation and supplemented the obligation with a requirement to disclose best execution arrangements to clients.

The HSBC Markets Hong Kong SFC Best Execution Disclosure has been prepared in compliance with these regulatory requirements.

Download the HSBC Markets Hong Kong SFC Best Execution Disclosure (PDF, 3.3MB)

MiFID Best Execution

RTS 27 and RTS 28 reports

The reports required under MiFID II on execution quality (RTS 27) and on execution venue selection (RTS 28) for HSBC Bank Plc will be available on this web page in accordance with the timetable prescribed by ESMA.

Access HSBC RTS 27 reports

Access HSBC RTS 28 reports

Best Execution Policies and Disclosures

Policies that are applicable to HSBC Bank plc (HBEU) clients.

Policies that are applicable to HSBC UK Bank plc (HSBC UK) clients.

Policies that are applicable to HSBC Continental Europe (HBCE, ex-HBFR) clients.

Pour plus d'information à propos d'HSBC France et MiFID II merci de visiter http://www.business.hsbc.fr/mifid

For more information about HSBC France and MiFID II please visit http://www.business.hsbc.fr/mifid-en

IIROC Rule 3300 – Canadian Best Execution

The Investment Industry Regulatory Organization of Canada (IIROC) has published Dealer Member Rule 3300: Best Execution of Client Orders. The overreaching principle of best execution requires Global Markets Canada (GM Canada) (operating out of HSBC Securities (Canada) Inc.) to obtain the most advantageous execution terms for all client orders reasonably available under the circumstances where you place legitimate reliance on us to protect your interest. This Client Disclosure Statement (PDF, 313KB) provides information on GM Canada's approach to achieving best execution when acting for our clients in accordance with Rule 3300.

Market Abuse Directive (MAD I & II) and Market Abuse Regulation (MAR)

The Market Abuse Regulation (MAR) and the Criminal Sanctions for Market Abuse Directive (CSMAD), together ‘MAD II’ constitute a review of the EU Market Abuse Directive of 2003. MAD II entered into force on 3 July 2016 and seeks to enhance and harmonise the European Union regime on market abuse. It increases the former scope, introduces new offences such as attempted insider dealing, manipulation of benchmarks and commodities, and enhances requirements on firms operating in the EU financial markets.

MAR imposes requirements on certain communications to clients. Where a communication constitutes an ‘investment recommendation’, certain disclosures must be provided. These disclosures include statements as to certain potential conflicts of interest and as to changes to previous recommendations.

You will find the relevant disclosures below and/or attached to the communications you receive from HSBC when required.

No action is needed from you in regards to these disclosures. Should you have any questions, please speak to your usual HSBC contact.

This is not Independent Investment Research.

This material has been prepared by a member of the sales and trading department of a member of the HSBC Group of companies (“HSBC Group”), and not by HSBC’s Research Department. This is a desk view & not investment advice. Investors must make their own determination & investment decisions.

Further details on the basis of valuations or methodologies, and the underlying assumptions, used to evaluate financial instruments or issuers or to set price targets are stated below:

Black-Scholes with Default: This financial product is sensitive to both the equity stock modelling and the credit modelling of the same underlying. As such they are valued using a variant of Black-Scholes to factor in the risk of a default on one of the underlying using a Poisson process.
Variant of Black-Scholes: This financial product has been valued modelling directly the dividend Futures. The expected dividends are obtained through the usual equity market data, and their volatility is modelled using a variant of the Black-Scholes model.
Variant of Black-Scholes or PDE: This financial product has been valued based on the Black-Scholes framework, using a parametric interpolation for the volatility surface (in maturities and strikes), adjustments for dividend modelling, and the standard data of the forward curves (repo, dividends, interests rates and discount factors).
Present Value: This financial product has been valued by calculating the difference between the present values of future inflows with the present value of outflows. The present value of the future flows is estimated using the equity forward curves (equity flows) and a discount curve (fixed flows).
Marked to Market or Present Value: This financial product has been valued by either taking the value of the instrument itself which reflects the current market value or by calculating the present value. The models interpolates the forward values between observable tenors using various rates representing the repo and dividends (by underlying), as well as the market rate (by currency).
Variant of Replication: Variance swaps have been demonstrated to be theoretically replicable by a static portfolio of vanilla options. In practice a few adjustments are needed (dividend modelling, non-observability of all vanilla prices, etc.). This financial product has been valued using a variant this replication strategy that accounts for these second order effects.
Variants of Monte-Carlo or PDE: This financial product has been valued using a variant of the industry standard 'Dupire' diffusion model, which relies on a local volatility diffusion calibrated on the whole implied volatility surface (Vanilla prices). The diffusion is used either with a Partial Differential Equation (PDE) engine or a Monte-Carlo engine to obtain the Exotic Option price.

Instruments can fluctuate in price or value and prices, values or income may fall against your interests. Changes in rates of exchange and rates of interest may have an adverse effect on the value, price or income of these instruments. Past performance is not a guide to future performance. Instruments, which are illiquid, may be difficult to sell or realise; it may also be difficult to obtain reliable information about their value or the extent of the risks to which they are exposed. Contingent liability transactions may result in the loss of all the amount originally invested or deposited, and may also require future payments to be made by you. Any forward-looking information contained herein has been prepared on the basis of a number of assumptions any of which may prove to be incorrect, and accordingly actual results may vary.

Opinions, estimates and projections constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of HSBC and are subject to change without notice. HSBC has no obligation to update, modify or amend this report or to otherwise notify a recipient thereof if any opinion, forecast or estimate set forth herein changes or subsequently becomes inaccurate. Unless otherwise indicated, there are no planned updates to this report at the time of publication. All market data included in this recommendation are dated as at market close on the date prior to this report, unless otherwise indicated.

As of Q3 2024, the distribution of all sales and trading commentary published by HSBC in the previous 12 months is as follows:

Buy: 70.21 per cent (of which 53.42 per cent of issuers received IB services over the previous 12 months)
Hold: 4.2 per cent (of which 56.67 per cent of issuers received IB services over the previous 12 months)
Sell: 23.49 per cent (of which 75.68 per cent of issuers received IB services over the previous 12 months)
Other: 2.1 per cent (of which 76.47 per cent of issuers received IB services over the previous 12 months)

HSBC respects the confidentiality of information it receives about its clients and operates a “Need to Know” approach and complies with all applicable laws with respect to the handling of that information. Access to confidential information is restricted to those who have a proper requirement for the information consistent with the legitimate interest of a client or the bank. Under its conflicts of interest policy, HSBC has an independence policy requiring its employees to disregard any interest, relationship or arrangement. HSBC also maintains information barriers (“Chinese Walls”) which restrict access by its employees to information relating to areas of HSBC’s business and that of any of its group companies, agents, and third-party service providers ("Connected Company") with which, and the affairs of clients with whom, they are not directly concerned. Chinese Walls and other measures are put in place to enable HSBC to carry out business on behalf of clients without being influenced by other information held within HSBC that may give rise to a potential conflict of interest.

Notwithstanding the steps taken to manage conflicts, HSBC and any Connected Company may have interests which conflict with your interests and may owe duties to other clients which would otherwise conflict with the duties owed by HSBC to you. HSBC may recommend to you as a client, trade ideas, financial instruments, or services, in which it or any Connected Company, or a person with whom it has an association, or one of its other clients, may have an interest, relationship or arrangement that is material in relation to the transaction concerned. HSBC, or Connected Companies, or a person with whom any of them has an association, may be dealing as principal for HSBC or its own account, and could be matching a recommendation for a transaction with that of another client. In particular, but without limitation, HSBC may make recommendations to you or execute transactions on your behalf without prior notification to you of the fact that in doing so, where HSBC (or a Connected Company) is or may be (i) Selling financial instruments to, or buying financial instrument from, you as principal on its own account or that of a Connected Company or otherwise dealing or arranging deals in circumstances involving a Connected Company or making a market or dealing in financial instrument for its own account;(ii) Matching an order executed on your behalf with an order from another person (who may be a Connected Company) or otherwise acting as agent for, and receiving commission from, you and/or each such person;(iii) Acting or may have acted as financial adviser or providing services to other clients who have interests in the relevant financial instrument such as being the financial adviser or lending banker to the borrower or issuer whose financial instrument you are buying or selling, or acting for that borrower or issuer in a take-over bid, or acting for another borrower or issuer seeking to acquire that company;(iv) Acting or may have acted as financial adviser to or having some other relationship or arrangement with, the issuer or holder of the relevant financial instrument or another person who has an interest in such financial instrument;(v) In relation to transactions in financial instrument which are not listed instruments, being a member of an advisory or negotiating committee acting for a group of holders of those financial instrument (of which you may be one) in negotiations with an issuer of such financial instrument and gaining information affecting financial instrument in that capacity; (vi) Effecting or arranging transactions on your behalf in:(a) Units in a unit trust or other collective investment scheme which is managed or operated by HSBC or by a Connected Company or in respect of which HSBC or a Connected Company is a trustee or adviser;(b) financial instrument in which HSBC has a material interest as a result of the issue of such financial instrument having been sponsored or underwritten by HSBC or by a Connected Company or in relation to which a commission is paid to HSBC or a Connected Company by a third party with which HSBC or a Connected Company has a marketing arrangement;(c) financial instrument whose issuer is HSBC or a Connected Company;(vii) Allowed a commission by a third party if the transaction takes place.

HSBC and HSBC Group members will from time to time sell to and buy from customers the securities/instruments, or hold positions in, both equity and debt (including derivatives) of companies covered in this recommendation on a principal or agency basis and act as a market maker or liquidity provider in those securities/instruments. The employees of the sales and trading department of HSBC principally responsible for the preparation of this recommendation are in part compensated based on the profitability of HSBC, which includes sales and trading activities and the compensation may be linked to any fees resulting from the transactions undertaken by particular sales and trading desks.

Disclaimer:

This document is issued by a member of the HSBC Group of companies (“HSBC Group”). Where this document refers to “you” it refers to you or your organisation.]

The sales and trading department of HSBC may make markets in instruments or products to which this material relates. Accordingly, recipients should not regard this document as an objective or independent explanation of the matters contained herein. This document has not been prepared in accordance with regulatory requirements designed to promote the independence of investment research and is not subject to the same prohibitions relating to dealing ahead of the dissemination of independent investment research. Information contained herein should not be regarded as independent investment research for the purposes of the rules of any relevant regulatory body.

HSBC has based this document on information obtained from sources it believes to be reliable but which have not been independently verified. Opinions expressed may differ from the opinions expressed by other divisions of HSBC, including its research department. Opinions and estimates expressed are our present opinions only and may change at any time without notice. In addition, the analysis provided is not sufficient to inform an investment decision. Any charts and graphs included are from publicly available sources or proprietary data. Where information is from public sources, HSBC accepts no responsibility for its accuracy. Any indicative trade details provided should not be regarded as complete or as representing the actual terms on which HSBC may trade. Figures included in this document may relate to past performance or simulated past performance (together “past performance”). Past performance is not a reliable indicator of future performance. Any reference in this document to accounting, insurance or other regulations is based on HSBC’s interpretation and may not have been verified with relevant regulatory bodies.

This document is for the exclusive use of the person to whom it is provided by HSBC and is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution would be contrary to law or regulation. The recipient agrees to keep confidential at all times this document and information contained in it or made available by HSBC in connection with it. This document is intended to be distributed in its entirety. Reproduction or dissemination of this document, in whole or in part, or disclosure of any of its contents, without the prior consent of HSBC, is prohibited. Unless governing law permits otherwise, you must contact a HSBC Group member in your home jurisdiction if you wish to use HSBC Group services in effecting a transaction in any investment mentioned in this document. HSBC is under no obligation to keep current the information in this document.

This document is for information purposes and convenient reference. You are solely responsible for making your own independent appraisal of, and investigation into, the products, investments and transactions referred to in this document and you should not regard any information in this document as constituting investment advice. Neither HSBC nor any of its affiliates is responsible for providing you with legal, tax or other specialist advice and you should make your own arrangements in respect of this accordingly.

The issue of this document shall not be regarded as creating any form of adviser/client relationship, and HSBC may only be regarded by you as acting on your behalf as financial adviser or otherwise following the execution of an engagement letter on mutually satisfactory terms.

Except in the case of fraudulent misrepresentation, neither HSBC nor any of its affiliates, officers, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or part of this material.

This document is a “financial promotion” issued by a member of the HSBC Group of companies (“HSBC Group”).

PRIIPS Regulation

Securities and Futures Commission (SFC) Code of Conduct

In August 2022, the Securities and Futures Commission (“SFC”) implemented new provisions in the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (the “Code”) setting out the standards of conduct expected of a licensed or registered person engaging in book building and placing activities for share and debt offerings. Under the Code:

It applies to a licensed or registered person that engages in providing services to issuers, investors or both in respect of an offering of shares or debt securities (including convertible or exchangeable bonds) involving the following activities conducted in Hong Kong
- Bookbuilding activities, defined as collating investors’ orders, to facilitate the price determination and allocation of shares or debt securities or the process of assessing demand and making allocations
- Placing activities, defined as marketing or distributing shares or debt securities pursuant to bookbuilding activities
- Advising, guiding and assisting the issuer client in those bookbuilding and placing activities
For the purpose of paragraph 21 of the Code, share offering is defined as an offering of shares listed or to be listed on the Stock Exchange of Hong Kong Limited, while debt offering is defined as an offering of debt securities listed or unlisted, and offered in Hong Kong or otherwise.
It does not cover offerings which do not involve bookbuilding activities, such as club deals (bilateral agreements or arrangements between the issuer and the investors), private placements (transactions where only one or several investors are involved and the terms of the offering are negotiated and agreed directly between the issuer and the investors), transactions where shares or debt securities are allocated to investors on a pre-determined basis at a pre-determined price, block transactions (share offering which has been subscribed by an intermediary as principal deploying its own balance sheet, for onward selling to investors), or secondary offering (selling of listed shares by existing shareholders)

Due to the additional obligations of the Code imposed on in scope Hong Kong intermediaries, prospective investors should read the Notice (PDF, 675KB) setting out additional requirements which would affect investors of these in-scoped DCM transactions.

For further information, please visit the SFC website.

Swiss Federal Financial Services Act of 15 June 2018 ("FinSA")

The Swiss Federal Financial Services Act of 15 June 2018 (“Finanzdienstleistungsgesetz” or “FinSA”) sets out a series of requirements for entities and offices located/established outside of Switzerland that provide certain financial services to clients located in Switzerland (“Swiss Clients”), or make a public offer of securities in Switzerland. This webpage discusses the approach taken by HSBC Global Banking & Markets (“HSBC GBM”) businesses outside Switzerland, in implementing FinSA requirements in relation to dealing with those of its clients that are “in Switzerland” for purposes of FinSA.

Implementation dates

The client classification and code of conduct / organisation requirements must be applied by financial service providers no later than 31 December 2021. The HSBC FinSA Disclosure (PDF, 862KB) for Professional clients includes various disclosures that HSBC GBM is required to provide to relevant clients pursuant to those requirements.

The requirement for financial service providers to affiliate with a recognised ombudsman in Switzerland took effect on 24 December 2020 and the requirement for client advisers to be registered in Switzerland began to apply on 19 January 2021. Our analysis has concluded that these obligations do not apply to HSBC GBM businesses outside Switzerland.

HSBC FinSA Disclosure for Professional clients

Please review carefully the information set out in the HSBC FinSA Disclosure (PDF, 862KB) for Professional clients. In the event of questions please speak to your usual HSBC contact in the first instance.

UK Money Markets Code

In April 2017, The Bank of England’s Money Markets Committee published the UK Money Markets Code (the “Code”). The Code is voluntary and sets out the standards and best practice expected from participants in the UK unsecured deposit, repo and securities lending markets.

The purpose of the Code is to help restore trust between participants in the financial markets by facilitating fair, effective and transparent markets. The Code is endorsed by the Money Markets Committee.

As a market participant who transacts in the UK markets and a member of the Money Markets Committee, HSBC has committed to adhering to the overriding and underpinning principles set out in the Code by signing the Statement of Commitment to the Code. The Head of Global Banking and Markets, Europe, has signed on behalf of HSBC Bank Plc and the Head of Global Markets and Balance Sheet Management has signed on behalf of HSBC UK Bank Plc, HSBC’s ring-fenced entity.

In addition to demonstrating our commitment to the Code on this website (see the documents below), we have also publicised our Statement of Commitment on the Bank of England’s public register.

For further information on the Code, please refer to the Bank of England’s website.

Last updated: 28 November 2023

Need help?

For more information, please contact your HSBC representative.