MiFID II places higher standards on how banks and investment firms like HSBC conduct business with their clients. As a customer of HSBC, this means we’ll assess and give clarity on:

• The quality of financial advice we provide to you and how we determine the suitability of the advice we give, including giving you a letter outlining this assessment.
• Additional information on the costs and charges you may expect that relate to the services HSBC Global Private Banking provides, as well as the costs associated with the investments and products you buy and sell.

• Before you place a market order with us, or before you sign-up to one of our managed services, we will provide you with additional documentation which explains the costs and charges that you can expect to pay (“Pre-trade Costs and Charges Report”). This report gives a deeper understanding of the costs, so that you can make an informed decision on whether to proceed.
• You’ll receive an annual statement (“Annual Costs and Charges Report”) which will summarise the total costs and charges that you paid for the services received and transactions undertaken during the preceding 12 month period.
• When we supply a personal recommendation to you to buy, hold or sell an investment, we’ll also provide a suitability report explaining why we believe this recommendation is suitable for you, even if this does not result in an investment transaction.
• When you receive ongoing advisory or discretionary management services, we’ll automatically give you a periodic suitability report, explaining the ongoing suitability of your investments. In addition, we will notify you if the value of your discretionary portfolio depreciates by 10 per cent and thereafter by multiples by 10 per cent for your awareness.
• To provide greater transparency, we are committed to publishing an annual report each year, demonstrating how we achieved best execution for the orders that we executed for our clients and the market venues and brokers where these trades were executed. This report is available on the HSBC Global Private Banking website.

As a result of the new regulations, you may need to give us additional information in respect of your investment profile. For example, MiFID II expanded the scope of products which are considered to be "complex" and as a result we may need to ask you about your investment knowledge and experience in these products. This allows us to assess whether a transaction is appropriate for you. We may also be required to update the information within your investment profile using data you provide to us and as a result, may need it confirmed at a later date.

To enable us to be more transparent regarding the costs and charges on your investments and investment services, we have a regulatory obligation to disclose the aggregated information and therefore it is not possible to opt-out from receiving this.

The new costs and charges reports cover a wide range of products offered by HSBC Global Private Banking with the exception of Precious Metals, Insurance Products and Cash Deposit products.

On a pre-trade basis you can expect:

• A generic set of illustrative disclosures covering Foreign Exchange (FX), Fixed Income and Equities transactions, as well as our managed services.
• Specific disclosures are provided for Funds, Exchange Traded Funds (ETFs), Alternatives and Structured Products on a transactional basis.

On an annual basis you can expect:

• A disclosure of all costs and charges incurred for your portfolio throughout the reporting period – the “Annual Costs and Charges Report”.
• A more detailed report which shows the costs on an itemized basis is available at your request.

• The pre-trade Costs and Charges report provides an estimate of the potential costs of your investment, whereas the annual ex-post report discloses the actual costs that were incurred within your portfolio.
• The figures based on HSBC’s own data (Service costs) are accurate but Product costs are dependent on the quality of information made available to us by the manufacturers or data suppliers. In some cases, data may not be available at the time the annual Costs and Charges report is generated and this may impact the overall cost and performance calculations.

Product costs are not paid directly by yourself, they have always been charged by manufacturers and effectively reduce the returns achieved. We are now disclosing these costs as a separate category in both the pre-trade and annual Costs and Charges reports to improve clarity and help customers understand what they are paying for.

• The transaction cost figure includes an element of implicit cost (“slippage”), which is the difference between the mid-market price at the time the trade is sent to the market (“arrival price”) and exact execution price of the trade. It is possible for the slippage cost to be negative - for example when buying an asset the arrival price might be higher than the actual price paid.
• The offset resulting from anti-dilution techniques could in theory be higher than the fund transaction costs, where for example there are large investor inflows or outflows relative to the size of the fund and the underlying portfolio turnover, resulting in zero or negative transaction costs.

The annual Costs and Charges report shows disclosure at a portfolio level while the pre-trade documents present cost estimates at an asset level, so it may be difficult to compare the costs directly between the two reports.