HSBC Annual Income Opportunity Deposit Notes With Auto Cap Morningstar® Wide Moat, Series 1

Secondary market price*:
(less any applicable Early Trading Charges)
Last updated:

If held to maturity, the Notes will pay:

  • 100 per cent of the principal amount invested; and
  • Annual variable Coupons in each year of the Term, subject to a minimum of CAD1 per Note and a maximum of CAD7 per Note, depending upon the price performance of a notional portfolio consisting of ten equally-weighted shares set out below under the heading 'The Portfolio'. The annual variable Coupon amount will be equal to the Principal Amount multiplied by the applicable Coupon Rate. The Coupon Rate will be determined on the annual Valuation Dates and the corresponding Coupon amount will be payable on the applicable Coupon Payment Date. The Coupon Rate will be a percentage amount equal to the average of all of the ten Reference Share Returns, subject to a minimum Coupon Rate of 1 per cent and a maximum Coupon Rate of 7 per cent in each year of the Term. As a result, there is no assurance that a Coupon greater than CAD1 per Note will be payable in any year during the Term of the Note

Key features

Issue date: 17 June 2011
Maturity date: 17 June 2016
Note Term: 5 years
CUSIP #: CA40427HSE40
Currency: CAD
Selling agent fees: CAD2.50 per Note


  • Principal protected at maturity
  • Eligible for registered accounts
  • An annual variable Coupon, subject to a minimum of CAD1 per Note and a maximum of CAD7 per Note

Underlying asset(s)

Reference Share Ticker Exchange
CME Group Inc CME Nasdaq
Eli Lilly and Company LLY NYSE
Exxon Mobil Corporation XOM NYSE
Lockheed Martin Corporation LMT NYSE
Lowe's Companies, Inc. LOW NYSE
Microsoft Corporation MSFT Nasdaq
Northern Trust Corporation NTRS Nasdaq
Sysco Corporation SYY NYSE
Time Warner Cable Inc. TWC NYSE

Are the Notes right for you?

You may be suited to become a Noteholder if, among other benefits, you: (1) are looking for safety of principal if held to maturity; (2) want the potential to earn a return that may be greater than what is available from a traditional fixed term deposit but with similar risks to your principal investment; (3) want exposure to an investment that is linked to the performance of the Reference Shares; and (4) are investing for the longer term and believe that the Reference Shares will appreciate.

An investment in the Notes is suitable only for investors prepared to assume risks with respect to a return linked to the price performance of the Reference Shares. The Notes are designed for investors who are prepared to hold the Notes to maturity. The Notes have certain investment characteristics that differ from conventional fixed income investments. The Notes do not provide Noteholders with a return or income stream that is calculated or determined by reference to a fixed or floating rate of interest. A Note's return is reflected in the annual Coupon amounts, which will depend on the price performance of the Reference Shares (subject to a minimum Coupon amount of CAD1 per Note and a maximum Coupon amount of CAD7 per Note throughout the Term) as described in this Information Statement. At maturity, a Noteholder is entitled to be repaid their initial Principal Amount invested of CAD100 per Note. An investment in the Notes is not suitable for an investor looking for a return beyond the minimum annual Coupon amount of CAD1 per Note payable on each Coupon Payment Dates during the Term.

Early trading charge/Secondary market

HSBC Securities (Canada) Inc. intends, in normal market conditions, to use reasonable efforts to provide a secondary price for the Notes as principal, but reserves the right not to do so in the future in its sole discretion, without providing prior notice to the Noteholders. Sale of Notes prior to maturity may subject to an Early Trading Charge as follows:

Time period Early trading charge
Issue Date to and including 16 December 2011 2.50%
17 December 2011 to and including 16 June 2012 1.25%
17 June 2012 to and including the Maturity Date 0.00%

During the term of the Notes, you may inquire as to the net asset value of a Note or the level of the underlying Index and how it relates to the Variable Return that may be payable under the Notes, if any, by contacting HSBC at the number below.

Please see the Information Statement for further details or contact your investment advisor.

Risk factors

The Notes subject the Noteholders to significant risks, including the potential for lost investment opportunities. Potential Noteholders should carefully review and consider all risks set forth in this Information Statement including:

  • The Notes will not constitute insured deposits
  • A Noteholder may not receive more than the minimum Coupon amount of CAD1 per Note on each annual Coupon Payment Date
  • A Noteholder will not receive more than the maximum Coupon amount of CAD7 per Note on each Coupon Payment Date
  • The Principal Amount is payable only if Notes are held to maturity
  • There is no guaranteed secondary market for the Notes and if such a market develops, there can be no assurance that it will be liquid
  • Price or other movements in the Reference Shares are unpredictable
  • The historical or pro forma performance of each Reference Share is not an indication of future performance, and
  • Adjustments as a result of certain Special Circumstances

Additional information

Right of Cancellation- A subscriber may cancel an order to purchase a Note (or cancel the purchase of a Note if the Note has been issued) by providing written instructions to HSBC directly or through his or her investment advisor any time up to two days after the later of (i) the day on which the agreement to purchase the Note is entered into and (ii) deemed receipt of this Information Statement. Such notice should be directed to: HSBC Derivative Products Group, 70 York Street, 8th Floor, Toronto, ON M5J 1S9, Fax (416) 868-3088. This rescission right does not extend to Noteholders buying a Note in any secondary market.

Please see the Information Statement for further details. Please do not hesitate to call us at +1 866 511 4722 or send us an
e-mail for more information.

*The price is before the application of an early trade charge that may apply. The secondary market price for a Note, if available, represents the bid price of such Note as a percentage (%) of the original principal amount invested. The bid price stated is only as of the date indicated.