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Structured Products
Currency Linked IV
- Structured Investment Deposit is a structured investment product involving derivatives. The investment decision is yours but you should not invest in Structured Investment Deposit unless the intermediary who sells it to you has explained to you that the product is suitable for you having regard to your financial situation, investment experience and investment objectives.
- This is a structured investment product, which is NOT protected by the Deposit Protection Scheme in Hong Kong.
Additional risks are disclosed in the section of "Risk disclosure" below. Please refer to it for details.
- simpler and less risky investment
- 100% protection of your capital at maturity while you do not mind to lock up your structured investment deposit for a certain period (e.g. from 3 months to around 1 year)
- Potential interest return which is higher-than-time deposit based on your view that the chosen currency pair will move within a pre-determined range during the investment period if held to maturity.
Capital Protected Investment Deposit - Currency Linked IV may be your choice.
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| Place a structured deposit using your preferred currency e.g. AUD |
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| At maturity, receive | |
| 100% of principal + |
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Interest accrued DAILY if the currency pair move within the target range |
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Available in branches |
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Available Online (For HSBC Premier Customers only) |
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| Customer View | AUD/USD spot rate will stay within the range of 0.7410 to 0.7710 (inclusive) in the coming 3 months |
| Deposit currency | Australian Dollar (AUD) |
| Deposit Period | 3 months |
| Linked exchange rate | AUD / USD |
| Spot exchange rate | 0.756 |
| Target range | 0.7410 to 0.7710 inclusive (Spot exchange rate + / - 0.015) |
| Maximum Accrued Payout | 1.7% (6.65% p.a.) |
| Accrual payout | 1.70% x (No of days during the observation period with Fixing Rate within the target range / Total no of days during the observation period) |
| Upon maturity, customer receives | 100% of principal + Accrual payout x principal |
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For your reference, if AUD 17,500 is placed in a 3-month AUD time deposit on 17 May 201X, the interest rate/ yield is 3.56% p.a.
Payout scenario
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| Scenario 1 (Best case scenario) |
Scenario 2 (Middle of the Road scenario) |
Scenario 3 (Worst case scenario) |
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| AUD/USD target range | 0.7410 - 0.7710 inclusive | ||
| Maximum accrual payout Maximum annualized accrual payout |
1.70% (6.65% p.a.) |
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| Total no of days with the spot rate within the target range during the observation period | 69 | 19 | 0 |
| Total no of days during the observation period | 69 | ||
| Accrual payout (Annualized accrual payout) |
1.70% x 69/69 = 1.70% (6.65% p.a.) |
1.70% x 19/69 = 0.47% (1.84% p.a.) |
1.70% x 0/69 = 0% (0% p.a.) |
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Assuming that the Bank becomes insolvent during the tenor of this product or defaults on its obligations under this product, you can only claim as its unsecured creditor. You may get nothing back and suffer a total loss of your deposit amount.
Graphic presentation
The price volatility of the product is low, and the product is normally 100% capital protected upon maturity (for products with scheduled maturity). Customers may adopt a passive strategy on the investment.
This product may be suitable for investors who are happy to accept low level of investment risk.
The above scenarios are provided for illustrative purposes only, and do not reflect a complete analysis of all possible gain and loss scenarios that may arise during any actual investment. No representation or warranty is made by the Bank that any scenario described above can be duplicated under real investment conditions. Actual results may vary from the results shown above, and variations may be material.
Risk Disclosure
- Not a time deposit - Currency Linked IV is NOT equivalent to, nor should it be treated as a substitute for, time deposit. It is NOT a protected deposit and is NOT protected by the Deposit Protection Scheme in Hong Kong.
- Derivatives risk - Currency Linked IV is embedded with FX option(s). Option transactions involve risks. If the exchangerate of the chosen currency pair performs against expectation during the whole deposit period, you will earn no return on the deposit.
- Limited potential gain - The maximum potential gain is limited to the maximum accrual payout on the deposit (when exchange rate of the chosen currency pair stays within the pre-set target range during the entire observation period).
- Not the same as buying the linked currency - Investing in Currency Linked IV is not the same as buying the linked currency directly.
- Market risk - The return of Currency Linked IV will depend upon the exchange rate of the chosen currency pair against the target range during the observation period. Movements in exchange rates can be unpredictable, sudden and drastic, and affected by complex political and economic factors. You must be prepared to take the risk of earning a very low return or even no return on the money invested.
- Liquidity risk - Currency Linked IV is designed to be held untill maturity. You do not have a right to request early termination of this product before maturity.
- Credit risk of the Bank - Currency Linked IV is not secured by any collateral. When you invest in this product, you will be relying on the Bank's creditworthiness. If the Bank becomes insolvent or defaults on its obligations under this product, you can only claim as an unsecured creditor of the Bank. In the worst case, you could suffer a total loss of your deposit amount.
- Currency risk - If the deposit currency is not your home currency, and you choose to convert it back to your home currency upon maturity, you may make a gain or loss due to exchange rate fluctuations.
- Risk of early termination by the Bank - The Bank shall have the discretion to uplift a Deposit or any part thereof prior to the Maturity Date (subject to the deduction of such break costs or the addition of such proportion of the return or redemption amount, which may result in a figure less than the original principal amount of the Deposit) if it determines, in its sole discretion, that this is necessary or appropriate to protect any right of the Bank to combine accounts or set-off, or any security interest, or to protect the Customer's interests.
