Launch Announcement for Callable Bull/Bear Contracts ... - HKExnews

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire,
purchase or subscribe for the CBBCs described below.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited (the stock exchange)
take no responsibility for the contents of this announcement, make no representation as to its accuracy or
completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance
upon the whole or any part of the contents of this announcement.
This is a derivative product or a structured product which involves derivatives. Do not invest in it unless you fully
understand and are willing to assume the risks associated with it. You are warned that the price of the CBBCs
may fall in value as rapidly as it may rise and you may sustain a total loss of your investment. You should fully
understand their potential risks and rewards and independently determine that they are appropriate for you. You
should consult with advisers if necessary.
Bull/Bear CBBCs
issued by
The Hongkong and Shanghai Banking Corporation Limited
(incorporated in Hong Kong with limited liability under the Companies Ordinance of Hong Kong)
Non-collateralised Structured Products
Announcement
We intend to issue the following bull/bear CBBCs detailed below (the CBBCs).
Stock Code 64825 64827 64831
Unit
Existing issued HKD traded
units of the Fund (stock code:
2822)
Existing issued HKD traded
units of the Fund (stock code:
2822)
Existing issued HKD traded
units of the Fund (stock code:
2822)
Fund (1) CSOP FTSE China A50 ETF CSOP FTSE China A50 ETF CSOP FTSE China A50 ETF
Style European European European
Type Bull Bull Bear
Category R R R
Settlement
method
Cash Settled Cash Settled Cash Settled
Issue size 80,000,000 CBBCs 80,000,000 CBBCs 40,000,000 CBBCs
Issue price HK$0.25 per CBBC HK$0.25 per CBBC HK$0.25 per CBBC
Call price HK$8.20 HK$7.90 HK$9.68
Strike price HK$7.90 HK$7.60 HK$9.98
Launch date (for
all series)
Issue date (for
all series)
20 December 2013
30 December 2013
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Stock Code 64825 64827 64831
Observation
commencement
date (for all
series)
31 December 2013
Expiry date 20 October 2014 24 November 2014 1 December 2014
Valuation date
The trading day (2) immediately
preceding the expiry date
The trading day (2) immediately
preceding the expiry date
Board lot 2,000 CBBCs 2,000 CBBCs 2,000 CBBCs
Entitlement One unit One unit One unit
Number of
CBBCs per
Entitlement
Ten CBBCs Ten CBBCs Ten CBBCs
Funding cost per HK$0.115 HK$0.086 HK$0.168
launch date (3)
CBBC as of
Effective 3.68x 3.68x 3.68x
gearing (4)
Gearing (4) 3.68x 3.68x 3.68x
Premium (4) 12.92% 9.66% 18.78%
Liquidity
provider
HSBC Securities Brokers
(Asia) Limited
(Broker ID: 9609)
Levels 17 and 18,
HSBC Main Building,
1 Queen’s Road Central,
Hong Kong
Tel: (852) 2822 1849
HSBC Securities Brokers
(Asia) Limited
(Broker ID: 9611)
Levels 17 and 18,
HSBC Main Building,
1 Queen’s Road Central,
Hong Kong
Tel: (852) 2822 1849
The trading day (2) immediately
preceding the expiry date
HSBC Securities Brokers
(Asia) Limited
(Broker ID: 9615)
Levels 17 and 18,
HSBC Main Building,
1 Queen’s Road Central,
Hong Kong
Tel: (852) 2822 1849
(1)
The name of the Fund is included here for identification purposes only. “FTSE ® ” is a trade mark of the London Stock Exchange
Group companies (“LSEG”) and is used by FTSE International Limited (“FTSE”) under licence . The CBBCs are not sponsored,
endorsed, sold, or promoted by FTSE, LSEG or CSOP Asset Management Limited (“CSOP”). FTSE, LSEG and CSOP make
no representations or warranties with respect to this document or to the owners of the CBBCs or any member of the public
regarding the advisability of investing in the CBBCs. FTSE, LSEG and CSOP have no obligation or liability in connection with
the operation, marketing, trading or sale of the CBBCs.
(2)
“trading day” means a day on which the stock exchange is scheduled to be open for trading for its regular trading sessions.
(3)
The funding cost is calculated in accordance with the following formula:
Funding Cost =
Strike price x funding rate x n/365
Number of CBBCs per entitlement
Where:
(i)
(ii)
“n” is the number of days remaining to expiration; initially, “n” is the number of days from (and including) the launch
date to (and including) the trading day immediately preceding the expiry date; and
the funding rate will fluctuate throughout the term of the CBBCs as further described in the relevant supplemental listing
document in respect of the CBBCs. As of the launch date, the funding rate (a) in respect of stock code 64825 was 18.12%
p.a.; (b) in respect of stock code 64827 was 12.64% p.a.; (c) in respect of stock code 64831 was 18.31% p.a..
(4)
The gearing, effective gearing and premium may not be comparable to similar information provided by other issuers of structured
products as each issuer may use different pricing models.
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The CBBCs are in global registered form and exercisable only in the relevant trading board lots
specified above.
What is a mandatory call event? What happens if a mandatory call event occurs?
For a series of bull CBBCs:
A mandatory call event occurs if the spot price is at or below the call price at any time during
a trading day in the observation period.
For a series of bear CBBCs:
A mandatory call event occurs if the spot price is at or above the call price at any time during
a trading day in the observation period.
Spot price means:
(1) in respect of a continuous trading session of the stock exchange, the price per unit concluded
by means of automatic order matching on the stock exchange as reported in the official
real-time dissemination mechanism for the stock exchange during such continuous trading
session in accordance with the Rules of the Exchange (the trading rules), excluding direct
business (as defined in the trading rules); and
(2) in respect of a pre-opening session or a closing auction session (if applicable) of the stock
exchange (as the case may be), the final indicative equilibrium price (as defined in the
trading rules) of the unit (if any) calculated at the end of the pre-order matching period of
such pre-opening session or closing auction session (if applicable) (as the case may be) in
accordance with the trading rules, excluding direct business (as defined in the trading rules),
subject to such modification and amendment prescribed by the stock exchange from time to time.
A trading day means a day on which the stock exchange is scheduled to be open for trading for
its regular trading sessions.
The observation period means the period from the observation commencement date to the trading
day immediately preceding the expiry date (both dates inclusive).
Upon the occurrence of a mandatory call event, the CBBCs will terminate automatically and
you will receive from us the residual value being an amount calculated by us in accordance with the
following formula, less any exercise expenses:
For a series of bull CBBCs:
Residual value per board lot =
Entitlement x (minimum trade price – strike price) x one board lot
Number of CBBCs per entitlement
If the residual value is a negative amount it shall be deemed to be zero.
Minimum trade price means the lowest spot price during the MCE valuation period (being the
period commencing from and including the moment upon which the mandatory call event occurs and up
to the end of the following trading session on the stock exchange, subject to any potential extension).
For a series of bear CBBCs:
Residual value per board lot =
Entitlement x (strike price – maximum trade price) x one board lot
Number of CBBCs per entitlement
If the residual value is a negative amount it shall be deemed to be zero.
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Maximum trade price means the highest spot price during the MCE valuation period (being the
period commencing from and including the moment upon which the mandatory call event occurs and up
to the end of the following trading session on the stock exchange, subject to any potential extension).
How do we calculate the cash settlement amount at expiry?
If no mandatory call event occurs during the observation period and on the expiry date, the value
of the cash settlement amount is greater than zero, the CBBCs will be automatically exercised. You
are not required to deliver any exercise notice and you will receive from us the cash settlement amount
(if any) in Hong Kong dollars calculated by us as follows, less any exercise expenses:
For a series of bull CBBCs:
Cash settlement amount
per board lot
=
Entitlement x (closing price – strike price) x one board lot
Number of CBBCs per entitlement
If the cash settlement amount is a negative amount it shall be deemed to be zero.
For a series of bear CBBCs:
Cash settlement amount
per board lot
=
Entitlement x (strike price – closing price) x one board lot
Number of CBBCs per entitlement
If the cash settlement amount is a negative amount it shall be deemed to be zero.
Closing price is the closing price of one unit (as derived from the daily quotation sheet of the
stock exchange, subject to adjustments) on the valuation date.
Where can you obtain further information?
Our base listing document dated 29 April 2013 (the base listing document), the addendum to
the base listing document dated 12 August 2013 together with any additional addenda or successor
document, our supplemental listing document to be dated 30 December 2013 and our latest publicly
available annual report and interim report will be available for inspection, together with their Chinese
translations, during usual business hours at our office, which is presently at HSBC Main Building, 1
Queen’s Road Central, Hong Kong. Information on us can also be found on the website of the group
of companies to which we belong, which is www.hsbc.com.
How will the liquidity provider provide quotes?
The liquidity provider will provide liquidity by responding to requests for bid and ask quotes. A
quote may be obtained by calling its telephone number.
Additional information
The CBBCs constitute general unsecured contractual obligations of us as the Issuer and of no
other person and will rank equally among themselves and with all our other unsecured obligations (save
for those obligations preferred by law) upon liquidation. If you purchase the CBBCs, you are relying
upon the creditworthiness of us, and have no rights under the CBBCs against the Fund, the manager
or trustee of the Fund. If we become insolvent or default on our obligations under the CBBCs, you
may not be able to recover all or even part of the amount due under the CBBCs (if any).
– 4 –

An application will be made to the stock exchange for the listing of, and permission to deal in,
the CBBCs on the stock exchange. The date of commencement of dealings in the CBBCs is expected
to be 31 December 2013.
Other than being a licensed bank in Hong Kong regulated by the Hong Kong Monetary Authority,
a registered institution under the Securities and Futures Ordinance (Cap. 571) of Hong Kong and a
licensed bank under the Banking Ordinance (Cap. 155) of Hong Kong, we are not regulated by any
of the bodies referred to in rule 15A.13(2) or (3) of the Rules Governing the Listing of Securities on
the Stock Exchange.
Our long-term debt ratings are AA- by Standard and Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc. and Aa2 by Moody’s Investors Service, Inc., New York.
The Hongkong and Shanghai Banking Corporation Limited
20 December 2013
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