Compensation Conflicts | HSBC


HSBC Securities (USA) Inc.
HSBC Insurance Agency (USA) Inc.

About Compensation and Conflicts

Compensation of Individuals

Our Financial Professionals1 aim to serve the interests of our clients and build long lasting, mutually valuable client relationships. To be more consistent with that aim, our Financial Professionals and managers do not receive commission-based compensation. They are paid a salary with the opportunity to receive incentives through fully discretionary bonuses.

Financial Professionals may participate in HSBC recognition programs involving travel and entertainment, and they are also permitted by law and by HSBC Securities (USA) Inc.'s (HSBC Securities) policy to receive certain forms of compensation from third parties (including mutual fund and annuity product providers) such as meals, occasional ticket to events, and gifts of a nominal value as permitted by industry regulations. Also, a mutual fund or annuity provider may sponsor events for educational purposes to which individual representatives may be invited.

HSBC Securities (USA) Inc. and HSBC Insurance Agency (USA) Inc. reserve the right, at their discretion and without prior notice to change the methods by which they compensate their sales professionals.

Compensation to HSBC Securities (USA) Inc. and HSBC Insurance Agency (USA) Inc.

When acting as a broker, HSBC Securities (USA) Inc. earns revenue based on the proprietary and third party products and services provided to our clients. This includes commissions generated in connection with client transactions in funds, equities and fixed income products and revenue from other products we may recommend to you. For example, HSBC Securities (USA) Inc. earns revenue based on sales loads, commissions, or concession in connection with the offering of various packaged products, such as mutual funds, exchange traded funds (ETFs) or 529 College Savings Plans.

For investment advisory managed products, including Spectrum and MPA ("managed products"), HSBC Securities (USA) Inc. is the sponsor of the HSBC Securities (USA) Inc. managed products. HSBC Securities (USA) Inc. is a registered investment adviser that serves as the Investment Adviser and receives management fees. HSBC Global Asset Management (USA) Inc. provides administrative and other services to HSBC Securities (USA) Inc. HSBC Global Asset Management (USA) Inc. and certain other sub-advisers receive a fee for their mutual fund investment services, separate from the investment management fee charged for managed products. HSBC Global Asset Management (USA) Inc. also serves as the adviser and administrator of HSBC Funds, which may be among the underlying investments in the managed products. Certain HSBC Funds also have sub-advisers, not always affiliated with HSBC Global Asset Management (USA) Inc., that receive fees for providing various services to the funds. Mutual funds (including ETFs) outside of the HSBC Fund family are also offered as options in the managed products and may be advised by investment managers affiliated or unaffiliated with HSBC Securities (USA) Inc., who also receive a fee for their investment services. Foreside Distribution Services, L.P., member FINRA, is the distributor of the HSBC Funds and is not affiliated with the Financial Professional. HSBC Securities (USA) Inc., member NYSE, FINRA and SIPC is a sub-distributor of the HSBC Funds.

If you would like a current copy of the ADV Part 2 for any of the parties involved in the management of the managed products, including applicable advisors, please contact an HSBC Securities (USA) Inc. financial professional. These documents will contain complete information relating to the services and fees of the managed products. Feel free to ask you financial professional about our compensation for any particular service or product you purchase.

As insurance agents, HSBC Securities (USA) Inc. and HSBC Insurance Agency (USA) Inc. earn compensation for the sale of insurance and annuity products. The amount of compensation is based on the insurance policy or annuity contract you purchase.

Please note that certain types of products (including different share classes of mutual funds) pay greater compensation than others to HSBC Securities (USA) Inc. or HSBC Insurance Agency (USA) Inc.

It is permissible for HSBC Securities (USA) Inc. and HSBC Insurance Agency (USA) Inc. to receive funds from other sources, including reimbursements from third parties such as mutual funds, unit investment trusts, and insurance companies for the cost of recognition or education programs and seminars for employees and clients.

Further, as noted above, HSBC Securities (USA) Inc. is sponsor for managed products and it engages HSBC Global Asset Management (USA) Inc. to perform certain services in connection with those managed products.

A Note about HSBC Proprietary Products

When offering mutual funds, our representative may recommend an HSBC Fund. HSBC Global Asset Management (USA) Inc. is an affiliate of HSBC Securities' (USA) Inc. and HSBC Insurance Agency (USA) Inc. and it earns additional revenue, including management fees, if you choose to buy a HSBC Fund. Please refer to the fund prospectus and statement of additional information for more information about fees payable to HSBC affiliates.

Additionally, HSBC Securities (USA) Inc. may sell and be compensated for other proprietary products, including, for example, the sale of structured products issued by HSBC Bank USA, N.A. or HSBC USA Inc. affiliates. Our affiliates also earn revenue as described in the applicable offering documents.

Investment, Annuity and Insurance Products:

1 Financial professional refers to Premier Wealth Advisors (PWA), Premier Relationship Advisors (PRA) and Financial Advisors (FA). PWA/PRAs primarily focus on a full suite of Premier products and services while FAs primarily focus on a full suite of Advance products and services. Both offer bank products through HSBC Bank (USA) N.A., investments and certain insurance products, including annuities, through HSBC Securities (USA) Inc. and traditional insurance products through HSBC Insurance Agency (USA) Inc.


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