HSBC Annual Income Opportunity Deposit Notes With Auto Cap "Morningstar® Wide Moat", Series 3

Secondary Market Price*:
Last Updated:

If held to maturity, the Notes will pay:

  • 100% of the Principal Amount invested;
  • Fixed Coupon amount equal to $3.00 per Note on the first year Coupon Payment Date; and
  • Beginning in the second year and ending at maturity, a Noteholder may be entitled to receive an annual Coupon of up to a maximum of $5.25 per Note, depending upon the price performance of the Portfolio(as defined below). The annual variable Coupon amount, if any, 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 (10) Reference Share Returns, subject to a maximum Coupon Rate of 5.25%. As a result, there is no assurance that a Coupon greater than $1.00 per Note will be payable in any year during the Term of the Note.

Key features

Issue date: 5 August 2011
Maturity date: 5 August 2016
Note Term: 5 years
CUSIP #: CA40427HSH70
Currency: USD
Selling agent fees: $2.50 per Note


  • Principal protected at maturity
  • Eligible for registered accounts Fixed Coupon of 3.00% in year 1
  • An annual variable Coupon, subject to a minimum of $0.00 per Note and a maximum of $5.25 per Note (in years 2 through 5)

Underlying asset(s)

Reference Share Ticker Exchange
Biogen Idec Inc. BIIB Nasdaq
Boston Scientific Group BSX NYSE
Potash Corp of Saskatchewan POT NYSE
Maxim Integrated Products MXIM Nasdaq
Blackrock Inc. BLK NYSE
Johnson & Johnson JNJ NYSE
Harley-Davidson Inc. HOG NYSE
Vulcan Materials Co. VMC NYSE
Monsanto Co. MON NYSE
Applied Materials, Inc. AMAT Nasdaq

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(if any), which will depend on the price performance of the Reference Shares (subject to a fixed Coupon amount of $5.00 per Note in only the first year of the Term and a maximum annual variable Coupon amount, if any, of $5.25 per Note each year thereafter throughout the Term) as described in this Information Statement. At maturity, a Noteholder is entitled to be repaid their initial Principal Amount invested of $100.00 per Note. An investment in the Notes is not suitable for an investor looking for a return beyond the fixed Coupon amount of $5.00 per Note payable only in the first year. There is no assurance that a Coupon will be payable in any subsequent year during the Term of the Note.

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 July 27, 2011 2.50%
January 30, 2012 to and including July 27, 2012 1.25%
July 30, 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;
  • Except in the first year, there is no assurance a Noteholder will receive a Coupon in any subsequent year during the Term of the Note;
  • Beginning in the second year and each year thereafter, a Noteholder will not receive more than the maximum Coupon amount of $5.25 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.