S&P 500 Index Linked Quarterly Averaging Deposit Notes

Matured price*: 118.59 %
Maturity date: 16 October 2012

The Notes will pay, if held to maturity: i) 100 per cent of the principal amount invested; and ii) a variable return that is linked to the positive percentage difference, if any, between the arithmetic average of the S&P 500® index closing levels on 24 preset observation dates (11 January, 11 April, 11 July and 11 October in each year) and the initial Index Level, subject to a minimum variable return of 20 per cent (equivalent to 3.09 per cent per annum return compounded annually) regardless of the performance of the index.

Key features

Issue date: 16 October 2006
Maturity date: 16 October 2012
Note term: 6 years
CUSIP #: CA40427HLL55
Currency: USD
Selling Agent Fees: 4 per cent paid upfront

Highlights

  • Eligible for registered accounts
  • Principal protected at maturity
  • Variable return based on quarterly averaging
  • Minimum variable return of 20 per cent of principal amount at maturity

Underlying asset(s)

S&P 500 Index

Are the Notes right for you?

The Notes may be an appropriate investment for you, if, among other things, you: (1) are looking for safety of principal if held to maturity; (2) want exposure to an investment that is linked to the performance of the S&P 500 Index; and (3) are investing for the longer term. The Notes do not provide investors with a return or income stream prior to maturity. The effective yield to maturity of the Notes may be less than that which would be payable on a conventional fixed-rate or floating-rate debt instrument. The Notes are generally more suitable for purchasing and holding up to maturity. Potential investors should consult with their own investment, legal and tax advisors to determine the suitability.

Early trading charges/Secondary market

HSBC Securities (Canada) Inc intends, in normal market conditions, but is under no obligation, 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 at its sole discretion, without providing prior notice to the Noteholders. Sale of Notes prior to maturity may be subject to an Early Trading Charge as follows:

Year 1 2 3
Charge 3.5% 2.5% 0%

Please see the Term sheet for further details or contact your investment advisor.

Risk factors

Noteholders should carefully review and consider all risks set forth in the Term Sheet with their investment advisor, including:

  • The volatility or degree to which the level of the Index changes
  • Notes will not constitute insured deposits under the Canada Deposit Insurance Corporation Act
  • The principal amount is protected only if Notes are held to maturity and there is no assurance the Notes will pay any variable return
  • No guaranteed secondary market
  • Price or other movements in the instrument or instruments comprising each Index are unpredictable
  • The historical, or pro forma, performance of each Index is not an indication of future performance
  • Extraordinary events – HSBC may redeem the Notes prior to maturity upon the occurrence of certain extraordinary events, which include events that could have an impact on HSBC's ability to perform its obligations under the Notes or to hedge its position in respect of its obligation to make payments under the Notes
  • Conflicts of interest with the calculation agent

Additional information

Right of Cancellation – A subscriber may only rescind any order to buy a Note (or its purchase if issued) by notice in writing to HSBC within 48 hours of the earlier of actual receipt and deemed receipt of the Information Statement. Such notice should be directed to: Senior Vice President, HSBC Derivative Products Group, 70 York Street, 8th Floor, Toronto, ON M5J 1S9. This rescission right does not extend to Noteholders buying a Note in any secondary market.

Amendments to Notes – The global deposit note filed on CDS representing the Notes may be amended without the consent of the holders by the Bank if, in the reasonable opinion of the Bank, the amendment would not materially and adversely affect the interests of the holders. In other cases, the global deposit note may be amended if the amendment is approved by a resolution passed by the favourable votes of the holders of not less than 662/3 per cent of the Notes.

Please see the term sheet 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.

Important: Please read the disclaimer carefully.