Structured Investment Deposits - Digital Binary Deposit

Product highlights

Earn potentially higher return than normal time deposit if the chosen exchange rates move in line with your view.

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Features and benefits

Earn potentially higher returns than that available on traditional time deposits

Opportunity to take advantage of your FX view without currency conversion

100% capital protection at maturity*

In any event you will receive your potential interest in the deposit currency

Available in a wide range of currencies including Renminbi

How it works

Digital Binary Deposit is a principal protected deposit with final redemption linked to a currency level at maturity.

The following hypothetical example illustrates the deposit mechanism:

Type Bullish
Currency Pair EUR/ USD
Deposit Currency USD
Deposit Tenor 3 months
Trigger 1.5550
Minimum Redemption Rate 100.36% (implied yield 1.41% p.a.)
Maximum Redemption Rate 100.67% (implied yield 2.62% p.a.)

Final Redemption Scenarios:

Scenario 1 :
At maturity, if EUR/USD fixes at or above Trigger, customer will get the Maximum Redemption Rate

Scenario 2 :
At maturity, if EUR/USD fixes at or below Trigger, customer will get the Minimum Redemption Rate

Default Scenario
In the worst case scenario (e.g. insolvency of the Bank), the investor may get nothing back and the potential maximum loss could be 100% of investment amount and no coupon received.

Scenario Analysis Disclaimer
The scenarios above 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

*The capital protection only applies to deposits held to maturity. Early redemption is not allowed. The deposit can only be withdrawn on the deposit maturity date.

Structured Investment Deposit – Digital Binary Deposit is a structured product involving derivatives. The investment decision is yours but you should not invest in Structured Investment Deposit – Digital Binary 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. Do not invest in it unless you fully understand and are willing to assume the risks associated with it. If you are in any doubt about the risks involved in the product, you may clarify with the intermediary or seek independent professional advice.

Structured Investment Deposit – Digital Binary Deposit is not listed on the Hong Kong Stock Exchange or any other stock exchange, and hence investors will not be entitled to claim from the Investor Compensation Fund.

Investment involves risks. Past performance of investment products are no guide to future performance. The value of investments and the income from them can fluctuate and is not guaranteed. Investors may not get back the amount they invest.

Issuer's Risk – you rely on HSBC's creditworthiness. The product is subject to both the actual and perceived measures of the credit worthiness of HSBC and there is no assurance of protection against a default by HSBC in respect of its payment obligations. In the worst case scenario (e.g. insolvency of HSBC), the investor might not be able to recover the principal and/or any interest /coupon (if any) and the potential maximum loss could be 100% of investment amount and interest/coupon received.

- Not a time deposit – Digital Binary Deposit 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 – Digital Binary Deposit is embedded with FX option(s). Option transactions involve risks. If the exchange rate of the currency pair performs against expectation at the fixing time on the fixing date, you can only earn the minimum return, which could be 0%, out of this structure.

- Limited potential gain – The maximum potential gain is limited to the Higher return, when exchange rate of currency pair at fixing moves in line with your anticipated direction.

- Not the same as buying the linked currency – Investing in Digital Binary Deposit is not the same as buying the linked currency directly.

- Market risk – The return of Digital Binary Deposit will depend upon the exchange rates of currency pair against trigger rate at the fixing time on the fixing date. 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 the lower payout/no return (if exchange rate performs against expectation) on the money invested.

- Liquidity risk - Digital Binary Deposit is designed to be held until maturity. You should not use it as a short term investment vehicle and should have sufficient liquid emergency funds to meet any unforeseen circumstances. You do not have a right to request early termination of this product before maturity. Under special circumstances, the Bank may accept your early redemption request at its sole discretion and on a case by case basis. The Bank will provide an indication of the redemption price upon such request. Your return upon such early redemption will likely be lower than that if the deposit were held until maturity and may be negative. You must be prepared that you may incur a significant loss of the deposit principal.

- Credit risk of the Bank – Digital Binary Deposit 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 principal.

- Currency Risk – If the deposit currency is not your home currency, and you choose to convert it back to your home currency at maturity, you may make a gain or loss due to exchange fluctuations.

- Risk of early termination by the Bank – The Bank shall have the discretion to uplift a Digital Binary 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 Digital Binary 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 your interests.

- Specific Risks related to RMB as Deposit Currency or as a currency in your chosen currency pair

  1. RMB currency risk - RMB is currently not freely convertible and conversion of RMB through banks in Hong Kong is subject to certain restrictions. You should note that the value of RMB against other foreign currencies fluctuates and will be affected by, amongst other things, the PRC government's control (for example, the PRC government regulates conversion between RMB and foreign currencies), which may adversely affect your return under the RMB products when you convert RMB into your home currency.
  2. This product (if denominated in RMB) will be denominated and settled in RMB deliverable in Hong Kong. RMB may be offered in Hong Kong and in Mainland China at different rates.
  3. This product (if denominated in RMB) does not have access to invest directly in Mainland China. Accordingly, its available choice of underlying investments denominated in RMB outside Mainland China may be limited, such limitation could have adverse effect on the return and performance of this product.
  4. Possibility of not receiving RMB upon redemption - The RMB denominated structured investment deposits may have a significant portion of non-RMB denominated underlying investments. There is a possibility that you will not receive the full amount in RMB upon redemption. This may be the case if the Bank is not able to obtain sufficient amount of RMB in a timely manner due to the exchange controls and restrictions applicable to the currency.

Note:
The information does not constitute a solicitation for the making of any deposit, or investment in any products referred to herein. The above deposits are not the same as nor should they be treated as a substitute for normal fixed time deposits. The return in relation to a deposit will depend upon market conditions prevailing at the relevant fixing time(s) during or in respect of the relevant deposit period. The level of the underlying asset may go up or down during such period and this will affect the return. The return may be less than would have been payable on a normal time deposit for the same period. You must be prepared to risk the interest that might otherwise have been earned on money invested as a deposit. If the deposit is not in 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. Investment involves risks. You should carefully consider whether any investment products or services mentioned herein are appropriate for you in view of your risk appetite, investment experience, objectives, financial resources and circumstances. This information is not intended to provide and should not be relied upon for tax, legal or accounting advice, investment recommendation or a credit or other evaluation of the product. Prospective investors should consult their tax, legal, accounting or other advisors. If you have any concerns about the products you should consult your professional advisers. For details on the relevant deposits, please refer to the Terms and Conditions, the relevant appendices and the fact sheets, all of which are available at HSBC branches from time to time.

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