HSBC Bank Canada. BEARISH S & P 500 LINKED PRINCIPAL PROTECTED Deposit Notes

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1 CONDITIONS & CERTAIN DISCLOSURE HSBC Bank Canada BEARISH S & P 500 LINKED PRINCIPAL PROTECTED Deposit Notes Principal Protected Deposit Notes Linked to the Downside Performance of the S&P 500 Index DUE SEPTEMBER 22, 2009 Price: Minimum CAD$10,000 in multiples of CAD$1,000 HSBC Securities (Canada) Inc. Lead Agent September 22, 2005

2 - 2 - PART I - CONDITIONS Form, Denomination and Beneficial Interests in Global Note 1. The 4 Year Bearish S&P 500 principal protected index linked deposit notes (collectively, the Notes, individually, a Note ) issued by HSBC Bank Canada ( HSBC ) in an aggregate amount equal to the Aggregate Principal Amount of this Global Note are evidenced by this Global Note. 2. This Global Note is initially registered in the name of CDS & Co., the nominee of The Canadian Depository for Securities Limited ( CDS ), and is held by CDS. Beneficial or other interests in this Global Note are represented through book-entry accounts, to be established and maintained by CDS, for financial institutions acting on behalf of the owners of such beneficial or other interests as direct and indirect participants of CDS. The records of CDS shall be conclusive evidence of the identity of the account holder with CDS or its nominee (the Relevant Account Noteholder ) and the interest in the Global Note credited to the account of each Relevant Account Noteholder. For the purposes hereof, a statement issued by CDS or its nominee as to (i) the name of any Relevant Account Noteholder, and (ii) the amount of the interest in the Global Note credited to the account of any Relevant Account Noteholder, shall be conclusive evidence of the records of CDS. 3. Except in the limited circumstances described in section 4, owners of beneficial or other interests in this Global Note shall not be entitled to have Notes registered in their names, shall not receive or be entitled to receive physical delivery of Notes and shall not be considered registered holders of Notes under these Conditions.. The responsibility and liability of HSBC in respect of the Notes represented by this Global Note is limited to making payment of any amount due on this Global Note to CDS or its nominee or registered assigns. HSBC shall not have any responsibility or liability for maintaining, supervising or reviewing any records of CDS relating to beneficial or other interests in this Global Note or for any aspect of the records of CDS relating to payments made by CDS on account of such beneficial or other interests. Certificated Notes 4. This Global Note is only exchangeable, in whole but not in part, for certificated Notes in definitive form (the Definitive Notes ) registered in the name of a person other than CDS or its nominee (the Nominee ) if CDS notifies HSBC that it is unwilling or unable to continue as depository in connection with this Global Note or if HSBC notifies CDS that it wishes to cease to use the CDS book-entry system. 5. Definitive Notes issued in exchange for this Global Note shall be issued as certificated Notes in fully registered definitive form in minimum denominations of CAD$10,000 and integral multiples of CAD$ 1,000, shall have the same benefits and be subject to the same terms and conditions as this Global Note (except insofar as they specifically relate to this Global Note), shall be registered in such names and in such denominations as CDS shall direct and shall be delivered by the persons in whose names such Definitive Notes are to be registered. 6. Upon the exchange of Definitive Notes for this Global Note, HSBC shall receive and cancel or cause to be received and cancelled this Global Note, shall reduce or cause to be reduced the holdings of the registered holder of this Global Note on the register in respect of this Global Note to nil and shall authenticate or cause to be authenticated Definitive Notes in an aggregate principal amount equal to and in exchange for the CDS participants beneficial or other interests in this Global Note as of the record date for such exchange, as directed by CDS. With respect to any record date occurring after any such exchange, HSBC shall make or cause to be made all payments in respect of such Definitive Notes to the registered holders thereof on such record date.

3 - 3 - Registration 7. HSBC shall keep or cause to be kept a register or registers in which shall be entered the names and addresses of the Noteholders and particulars of the Notes held by them respectively and in which transfers or exchanges of Notes may be registered. Title 8. None of HSBC, CDS or the Nominee shall be bound to see to the execution of any trust affecting the ownership of any Note or be affected by notice of any equity that may be subsisting with respect to any Note. HSBC shall deem and treat Noteholders, including the holder of this Global Note, as the absolute owners thereof for all purposes whatsoever notwithstanding any notice to the contrary. All payments to or to the order of Noteholders shall be valid and effectual to discharge the liability of HSBC on the Notes to the extent of the sum or sums so paid. Calculation and Payment 9. Interest on the Notes will be determined, earned, credited and paid on the Maturity Date based upon the change in value of the Index between the Index Set Date and the Final Index Set Date in accordance with the formula described under the definition of Index Return in Part III (Other Definitions) of this Global Note. Interest payable to the Noteholder will equal the Variable Coupon. If on the Final Index Set Date the Index Return is less than 0.00%, then the Note will be redeemed on the Maturity Date at 100% of the Aggregate Principal Amount. The redemption proceeds on the Maturity Date will be determined by HSBC in accordance with the following formula: Principal amount invested x {1 + [participation x MAX (0, Index Return)]} 10. Upon the occurrence of an Extraordinary Event and upon the terms specified in section 14, HSBC may elect to pay or cause to be paid the Variable Coupon prior to the Maturity Date. However, in no event will the Aggregate Principal Amount be paid prior to the Maturity Date. 11. If HSBC determines that an Extraordinary Event or any circumstance described under section 14 has occurred and is continuing, HSBC will appoint five calculation experts (collectively the Calculation Experts and individually a Calculation Expert ). Each Calculation Expert will be a person or company (other than HSBC or any affiliate thereof) that is an active participant in equity markets relevant to the Index. The Calculation Experts will act as independent experts, and not as agents for HSBC, and their calculations and determinations shall, absent manifest error, be final and binding on HSBC and the Noteholders. The calculations will be available to a Noteholder from HSBC. HSBC will promptly give notice to Noteholders of the occurrence of an Extraordinary Event or any circumstance described under section 16 and the appointment and identity of the Calculation Experts. The determination by HSBC that an Extraordinary Event or any circumstance described under section 15 has occurred and is continuing is subject to subsequent confirmation by a majority of the Calculation Experts promptly following their appointment. If HSBC determines that an Extraordinary Event has ceased, HSBC will so notify the Noteholders. 12. If HSBC determines that an Extraordinary Event has occurred and is continuing on any date that but for that event would be a Quarterly Valuation Date, then the Variable Coupon will be calculated on the basis that such Quarterly Valuation Date will be postponed to the next Business Day on which there is no Extraordinary Event in effect (and any Quarterly Valuation Date which was scheduled to follow the original Quarterly Valuation Date so postponed will also be postponed by the same number of Business Days from its scheduled date to follow accordingly that new Quarterly Valuation Date). A Quarterly Valuation Date shall not be the same date as any other Quarterly Valuation Date. Notwithstanding the foregoing, if on the fifth Business Day following the Maturity Date there are still one or more Quarterly

4 - 4 - Valuation Dates to occur, then despite the occurrence of any Extraordinary Event on or after such fifth Business Day, such fifth Business Day shall be a Quarterly Valuation Date (and if there are two additional remaining Quarterly Valuation Dates to occur, those additional Quarterly Valuation Dates shall be the sixth and seventh Business Days after the Maturity Date, and if there is only one other remaining Quarterly Valuation Date, that additional Quarterly Valuation Date shall be the sixth Business Day after the Maturity Date). In such case where a Quarterly Valuation Date is one that occurs on that fifth, sixth or seventh Business Day following the Maturity Date and on that date an Extraordinary Event has occurred and is continuing, the Closing Value for an Index for such Quarterly Valuation Date used for purposes of determining the Final Index Level in the calculation of the Variable Coupon will be a level (the Expert Estimated Level ) determined by the Calculation Experts as at such Quarterly Valuation Date taking into account all relevant market circumstances based upon the average of the estimates of the level by three of the five Calculation Experts whose estimates are neither the highest nor the lowest of the five estimates; provided that if two or more of the highest and/or lowest estimates are equal, only one of such higher and/or lower estimate shall be deemed to be the highest and/or the lowest estimate for the purpose of determining the average of the estimates of the Calculation Experts. 13. If an Extraordinary Event has occurred and is continuing, and if the Extraordinary Event has continued for at least five consecutive Business Days, HSBC may, at its option, elect to determine and pay or cause to be paidfor each Note the Variable Coupon on the Aggregate Principal Amount (and thus discharge its obligations in respect of the Variable Coupon). HSBC will notify or cause the Noteholders to be notified of such election (the date of such notification being the Extraordinary Event Notification Date ). The Variable Coupon will be determined and calculated as of the Extraordinary Event Notification Date; provided that (i) the last Quarterly Settlement Valuation Date will be the Extraordinary Event Notification Date, despite the occurrence and continuation of any Extraordinary Event on such date, and (ii) the Closing Value for an Index for each such Quarterly Settlement Valuation Date used for purposes of determining the Final Index Level in the calculation of the Variable Coupon will be the Expert Estimated Level determined as of that date by the Calculation Experts in the same fashion as noted in section If any Index is not calculated and announced by its respective Index Source, but is calculated and publicly announced by other independent authoritative persons or parties acceptable to a majority of the Calculation Experts (the Successor Sponsor ), the Variable Coupon nevertheless will be calculated by reference to the level of the respective Index at the close of the applicable Principal Exchange on the relevant Quarterly Valuation Date or Final Index Set Date so calculated and announced by such Successor Sponsor. If HSBC determines in good faith that the Index Source or Successor Sponsor materially changes the numerical form of or the method of calculating the respective Index or in any other way materially modifies such Index, the Calculation Experts will make such calculations as they may deem appropriate, so that the Variable Coupon due on the Payment Date shall be as near as practicable to that which would have been payable had such change or modification not taken effect. If at any time the Index Source or Successor Sponsor should cease calculation and dissemination of its respective Index, either temporarily or permanently, the Calculation Experts will make such calculations as they may deem appropriate to determine the Variable Coupon using the formula and method of calculating such Index as of the date such Index was last so calculated. Neither the Calculation Experts nor any Successor Sponsor will be responsible for good faith errors or omissions in calculating or disseminating information regarding any such Index, adjustments or calculations by the Calculation Experts or any Successor Sponsor in order to arrive at a calculation of a stock average approximating such Index or the Variable Coupon. 15. HSBC shall make or cause to be made any payment of the Variable Coupon and of the Aggregate Principal Amount on the Payment Date, by forwarding by post, or otherwise delivering, a cheque to the registered addresses of Noteholders or, if HSBC and the relevant Noteholder so consent, by otherwise transferring funds in respect of such Variable Coupon or Aggregate Principal Amount to the credit of such Noteholder, and HSBC shall adjust the register or cause it to be adjusted accordingly.

5 HSBC shall make or cause to be made any payment of the Variable Coupon and of the Aggregate Principal Amount of any Definitive Note issued in exchange for this Global Note on the Payment Date, to or to the order of the person or persons registered as the Noteholder of such Definitive Note by forwarding by post, or otherwise delivering, a cheque to the registered addresses of Noteholders or, if requested in writing by the relevant Noteholder at least five Business Days before the Payment Date, and agreed to by HSBC, by electronic funds transfer to an account nominated by the Noteholder with a financial institution in Canada upon presentation and surrender of such Definitive Note by the relevant Noteholder or their duly authorized attorney, and HSBC shall adjust the register or cause it to be adjusted accordingly. 17. Payments in respect of the Variable Coupon and the Aggregate Principal Amount shall only be made on a Business Day and if any date for payment is not a Business Day, payment shall be made on the next following Business Day and no interest shall be paid in respect of the delay in such payment. 18. Where a Note is registered in more than one name, each payment of the Variable Coupon and the Aggregate Principal Amount shall be paid to or to the order of all the joint registered holders thereof, failing written instructions to the contrary from all such joint registered holders, and such payment shall constitute a valid discharge of the Variable Coupon and the Aggregate Principal Amount so paid. 19. In the case of the death of one or more joint Noteholders, each payment of the Variable Coupon and the Aggregate Principal Amount may, notwithstanding section 8, be paid to the survivor or survivors of such Noteholders and such payment shall constitute a valid discharge of the Variable Coupon and the Aggregate Principal Amount so paid. Transfers, Exchanges and Replacements 20. This Global Note may not be transferred except as a whole by CDS to a nominee of CDS, or by a nominee of CDS to CDS or another nominee of CDS. This Global Note is transferable or exchangeable at the offices of HSBC located at 70 York Street, 8 th Floor, Toronto, Ontario, or at such other office as notified by HSBC to Noteholders for such purpose, accompanied by an instrument of transfer or exchange in a form approved by HSBC and which form is in accordance with prevailing Canadian transfer regulations and practices, executed by the Noteholder or such Noteholder s duly authorized attorney or legal personal representative, and upon registration of such transfer or exchange and cancellation of the Note or Notes presented, a new note or notes of an equal outstanding Aggregate Principal Amount of any authorized denomination or denominations shall be delivered as directed by the transferee, in the case of a transfer, or as directed by the Noteholder, in the case of an exchange. 21. HSBC shall authenticate and deliver or cause to be authenticated and delivered Notes in exchange for or in lieu of Notes outstanding on the register with the same maturity and of like form which have become lost, stolen, mutilated, defaced or destroyed, provided that the applicant thereof shall have (i) paid such costs as may have been incurred in connection therewith, (ii) (in the case of a lost, stolen or destroyed Note) furnished HSBC with such evidence (including evidence as to the serial number of the Note in question) and indemnity in respect thereof satisfactory to HSBC in its discretion, and (iii) surrendered to HSBC any mutilated or defaced Notes to be replaced. 22. HSBC shall not impose any fees in respect of the Notes, in the normal course of business, other than reasonable fees for the replacement of lost, stolen, mutilated, defaced or destroyed Notes. Rank 23. This Global Note and the Notes represented hereby will constitute a deposit liability of HSBC ranking equally with all other deposit liabilities of HSBC without any preference among themselves and at least equally with all other unsecured and unsubordinated indebtedness and obligations of HSBC outstanding from time to time (except as otherwise prescribed by law).

6 - 6 - Not an Insured Deposit 24. This Global Note and the Notes represented hereby do not constitute a deposit that is insured under the Canada Deposit Insurance Corporation Act (Canada) or any other similar legislation. Hedging 25. HSBC is entitled, either directly or indirectly, but not obliged, to enter into transactions in order to hedge its obligations under this Global Note. Purchases and Additional Issuances 26. HSBC reserves the right to issue additional Notes of this or another series, as well as other instruments or securities which may have terms substantially similar to the terms of the Notes offered hereby, and which may be offered by HSBC at any time, including concurrently with the offering of Notes. HSBC further reserves the right to purchase for cancellation at its discretion any amount of Notes in the secondary market, without notice to the Noteholders. Modification and Waiver 27. HSBC may from time to time amend, supplement or restate this Global Note or the Definitive Notes without the approval of the Noteholders for the following purposes: (i) ensuring or continuing compliance with applicable laws, regulations, rules or requirements of any governmental authority having jurisdiction over HSBC, (ii) changing the dates on which payments are required to be made to conform with customary settlement practices, (iii) making any modification that would not be prejudicial to the interests of Noteholders in the opinion of HSBC, and/or (iv) making changes or corrections which are necessary or desirable for the correction of typographical mistakes or are required for the purpose of curing any ambiguity or defective or inconsistent provisions or omissions or errors. Notices 28. If notice is required to be given to Noteholders in the circumstances contemplated in this Global Note, such notice shall be valid and effective if made through CDS by HSBC or its agent publishing for circulation to CDS participants a notice or bulletin setting forth the information specified or contemplated to be included in such notice. Noteholders will have access to such information through the CDS participants through which Notes are held. HSBC shall have no obligation to notify Noteholders or CDS participants in any other manner. Governing Law 29. The Notes are governed by and shall be construed in accordance with the laws of the Province of Ontario and the laws of Canada applicable in Ontario, without regard to conflicts of law principles. Language 30. The Noteholders confirm their express wish that this Global Note, as well as all other documents related to it, including notices, confirmations and receipts, be drawn up in the English language only and declare themselves satisfied therewith. Les porteurs de billets confirment leur volonté expresse de voir

7 - 7 - rédigés uniquement en anglais le présent billet global et les autres documents s y rattachant, notamment les avis, confirmations et reçus. Other Provisions 31. This Note shall enure to the benefit of and be binding on HSBC and the registered Noteholder and their respective successors, assigns and transferees. 32. No person other than the registered Noteholder shall have any rights against HSBC or any calculation agent, or any of their respective successors hereunder, or as a result hereof. 33. All amounts payable in respect of the Notes are payable in lawful currency of Canada, and all references to dollars are to CAD dollars. 34. The registered Noteholder waives presentment, demand, protest or other notice of any kind in the enforcement of this Global Note. 35. This Note is available for distribution only in provinces or territories where HSBC Securities (Canada) Inc. is registered pursuant to applicable securities legislation. 36. Terms not otherwise defined in this part are defined below in Part III Other Definitions. Secondary Market PART II CERTAIN DISCLOSURE RELATING TO NOTES 37. The distributor of the Notes is committed to using reasonable efforts to locate potential buyers (other than HSBC) should Noteholders wish to sell their Notes prior to the Maturity Date. However, there can be no assurance that potential buyers will be located and if potential buyers are not located, the Notes will have to be held until the Maturity Date. There is currently no market for the Notes, and there can be no assurance that such a market will develop. If such a market develops, there can be no assurance that it will be liquid. The Notes will not be listed on any stock exchange. 38. The trading price of a Note at any time will be dependent upon, among other factors, (i) how much the Closing Value of an Index has risen or fallen since the Index Set Date and the aggregate performance of the Index concluded up to such time, (ii) the fact that the Invested Amount is payable on the Maturity Date regardless of the Closing Value at any time and regardless of the aggregate performance of the Index concluded up to such time, and (iii) a number of other interrelated factors, including, without limitation, volatility in the Closing Value, prevailing interest rates, the dividend yields of the securities comprising the Index, the time remaining to the Maturity Date, and the market demand for the Notes. The relationship among these factors is complex and may also be influenced by various political, economic and other factors that can affect the trading price of a Note. 39. A Noteholder should consult his or her investment advisor as to whether it would be more favourable in the circumstances at any time to sell the Notes prior to the Maturity Date (assuming the availability of a secondary market) or hold the Notes until the Maturity Date. The redemption proceeds on the Maturity Date will be determined by HSBC in accordance with the formula described in section 9. Fees for Sales Prior to Maturity Date

8 Should a Noteholder elect to sell their Notes prior to the Maturity Date (assuming the availability of a secondary market), HSBC shall charge the following fees to the Noteholder on the principal amount of the Note in accordance with the chart below, depending on the applicable year of sale by the Noteholder. Under no circumstances may HSBC act as purchaser in the sale of such Notes by the Noteholder. Index Fees Year Fee 0.0% 0.0% 0.0% 0.0% 0.0% (% of principal amount of Note) 41. All information in this Global Note relating to the Index is derived from publicly available sources and is presented in this Global Note in summary form. As such, neither HSBC nor the selling agents assume any responsibility for the accuracy or completeness of such information. S&P The S&P 500 Index is compiled and published by Standard & Poor s. The S&P 500 is a capitalization-weighted index comprised of 500 of primarily widely-held U.S. based companies in leading industries. Tax 43. The following is a summary of the principal Canadian federal income tax considerations generally applicable to the acquisition, holding and disposition of a Note by a Noteholder who, for purposes of the Income Tax Act (Canada) (the Tax Act ) and at all relevant times, is resident in Canada, deals at arm s length with, and is not affiliated with, HSBC, and holds the Note as capital property (a Canadian Holder ). This summary is not applicable to a Canadian Holder that is a financial institution as defined in the Tax Act for the purposes of the mark-to-market rules. 44. It is a question of fact whether a Note will be considered capital property to a Noteholder. A Note will not be capital property to a Noteholder if either: (i) such Noteholder holds the Note in the course of carrying on a business of dealing in securities; or (ii) such Noteholder acquired the Note in a transaction or transactions considered to be an adventure in the nature of trade. Certain Noteholders whose Notes might not otherwise qualify as capital property, or who would like certainty with respect to the treatment of the Notes as capital property, may be entitled to make an irrevocable election to have the Notes, and all other Canadian securities (as defined in the Tax Act) held by the Noteholder, deemed to be capital property pursuant to subsection 39(4) of the Tax Act. Noteholders should consult their own tax advisors as to whether they will hold the Notes as capital property. 45. This summary is based upon the current provisions of the Tax Act and the regulations thereunder (the Regulations ) as at the date of offer of this issue, September 22, 2005, and also takes into account proposed amendments to the Tax Act and the Regulations publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (assuming such amendments are enacted as proposed), and the current published administrative practices of the Canada Revenue Agency (the CRA ). This summary does not take into account provincial, territorial or foreign income tax considerations. 46. This summary is of a general nature only, is not exhaustive of all Canadian federal income tax considerations and should not be interpreted or relied upon as legal or tax advice to any particular Noteholder. You should consult your tax advisors with respect to your particular circumstances.

9 - 9 - Interest Accrual 47. The Notes are prescribed debt obligations and investment contracts for the purposes of the Tax Act and the Regulations. Accordingly, a Canadian Holder will generally be required to include annually in income any interest deemed to accrue on the Notes in accordance with the provisions of the Tax Act and the Regulations. Based in part on an understanding of the CRA s administrative practice, there should be no deemed accrual of interest on the Notes for any taxation year of a Canadian Holder ending before the taxation year in which the Maturity Date occurs or the Variable Coupon is paid upon an Extraordinary Event. The interest accrual rules in the Tax Act and the Regulations are complex. Canadian Holders of the Notes should consult their own tax advisors regarding the application of these rules to their particular circumstances. Payment at Maturity 48. Where a Canadian Holder holds an interest in a Note at the Maturity Date, such a holder should be required to include in their income for the taxation year which includes the Maturity Date, the amount, if any, by which the amount paid on the repayment of the Note on the Maturity Date exceeds the principal amount of the Note. Disposition of the Notes 49. Although not free from doubt, a Canadian Holder who disposes of, or is deemed to dispose of, a Note (other than a disposition by virtue of the repayment of such Note by HSBC on the Maturity Date) should realize a capital gain (or a capital loss) to the extent that the proceeds of disposition of the Note, less any costs of disposition, exceed (or are exceeded by) the Canadian Holder s adjusted cost base of the Note at the time of disposition. Qualified Investments 50. Provided that a class of shares of HSBC is listed on a prescribed stock exchange for the purposes of the Tax Act (which includes the TSX), the Notes will be qualified investments under the Tax Act for a trust governed by a registered retirement savings plan, a registered retirement income fund, a registered education savings plan, or a deferred profit sharing plan (other than a deferred profit sharing plan under which contributions are made by HSBC or a corporation which does not deal at arms-length with HSBC). The Class 1 Preferred Shares, Series A of HSBC are currently listed on The Toronto Stock Exchange. Foreign Property 51. The Notes will not be foreign property for the purposes of the tax imposed under Part XI of the Tax Act. Withholding Tax 52. Any interest, principal or premium (including the Variable Coupon) paid or credited by HSBC to a Noteholder (that, at any time such amounts are paid or credited, is not resident in, or deemed to be resident, in Canada and deals at arms-length with HSBC for the purposes of the Tax Act) in respect of the Notes will not be subject to Canadian non-resident withholding tax under the Tax Act. Risk Factors Include Suitability of Notes for Investment

10 A person should reach a decision to invest in the Notes after carefully considering, with his or her advisors, the suitability of the Notes in light of investment objectives and the information herein contained. HSBC makes no recommendation as to the suitability of the Notes for investment. Other than the ability to obtain live unwind prices from HSBC there may not be an active trading market in the Notes 54. It is the current practice of HSBC to quote on request a live price (determined by HSBC in its sole discretion) which it may pay/charge for early termination (plus any applicable fee in accordance with Section 43) of any Note of this type that it issues. HSBC may under certain conditions such as a market disruption event affecting the markets generally or HSBC specifically cease to provide live unwind prices. A live unwind price for a note of this type on any day of its term may be affected by then-current market conditions including liquidity. A live unwind price for a note of this type can change significantly from day to day over the life of the note. HSBC is under no obligation to hold a price quoted for any length of time unless this is agreed at the time of giving the quote. Movements in the levels of the Index may affect whether or not certificateholders receive more than the minimum coupon amount 55. If on the Final Index Set Date the Index Return is less than 0.00% then the Note redemption on the Maturity Date will be 100% of the Aggregate Principal Amount. Hedging activities may create conflicts of interest between a Noteholder and HSBC 56. HSBC or one or more of its affiliates may hedge its obligations under the Notes by purchasing futures or options on any Index or shares of the companies comprising such Index or other derivative instruments with returns linked or related to changes in the performance of such Index, and HSBC may adjust these hedges by, among other things, purchasing or selling shares, futures or options or other derivative instruments linked to such Index at any time. Although they are not expected to, any of these hedging activities may adversely affect the level of the Index and, therefore, the market value of the Notes. It is possible that HSBC or one or more of its affiliates could receive substantial returns from these hedging activities while the market value of the Notes decline. Business activities may create conflicts of interest between a Noteholder and HSBC 57. HSBC or one or more of its affiliates may, at present or in the future, publish research reports with respect to any Index or its respective Index Source. This research is modified from time to time without notice and may express opinions or provide recommendations that are inconsistent with purchasing or holding the Notes. Any of these activities may affect the level of such Index and, therefore, the market value of the Notes. Extraordinary Event 58. If an Extraordinary Event occurs on a day on which the Closing Value of an Index is to be calculated, the determination of that value will be postponed to a later date. Fluctuations in the Closing Value of such Index may occur in the interim. The occurrence of an Extraordinary Event may accelerate the payment of the Variable Coupon in which case the Variable Coupon will be determined in an alternate manner by HSBC. HSBC will have no responsibility for good faith errors or omissions in calculation of the Variable Coupon. However, in no event will the Aggregate Principal Amount be paid prior to the Maturity Date. HSBC May Determine Closing Values 59. If any Index Source (or the Successor Sponsor) should cease calculation and announcement of its Index, HSBC will make such calculations as it may deem appropriate to estimate the Closing Value using

11 the formula and/or method of calculating such Index as of the date such Index was last so calculated. HSBC will have no responsibility for good faith errors or omissions in the calculation of any such Index. HSBC as Calculation Agent 60. HSBC will have sole responsibility for calculating the Variable Coupon. No independent calculation agent will be retained to confirm these determinations. No Benefit of CDIC Insurance 61. The indebtedness payable under the Notes is not insured under the Canada Deposit Insurance Corporation Act (Canada) or any other similar legislation. Non-Conventional Investments 62. The Notes have certain investment characteristics that differ from conventional fixed income investments. The Notes do not provide investors with an income stream or return prior to maturity, nor do they provide a return at maturity that is calculated or determined with reference to a fixed or floating rate of interest. The Notes entitle the owner to be paid a single payment of the Invested Amount and the Variable Coupon at the Maturity Date (subject, in the case of the Variable Coupon, to the occurrence of an Extraordinary Event), without interim payment on account of interest or principal. Credit Rating 63. The Notes will not be rated. As at September 22, 2005, the direct, unsubordinated and unsecured indebtedness of HSBC with a term to maturity in excess of one year was rated AA low by DBRS and A+ by S&P. This does not imply that the Notes described herein, if specifically rated by DBRS or S&P, would obtain the same rating as other direct, unsubordinated and unsecured indebtedness of HSBC. Credit Risk 64. The likelihood that Noteholders will receive payments owing to them at maturity will be dependent upon HSBC s creditworthiness and ability to pay. Notes Ceasing to be Qualified Investments 65. The Notes will be qualified investments under the Tax Act provided that a class of shares of HSBC is listed on a prescribed stock exchange (which includes The Toronto Stock Exchange). The Class 1 Preferred Shares, Series A of HSBC are currently listed on The Toronto Stock Exchange. However, it is possible that HSBC may, in the future, not have a class of shares listed on a prescribed stock exchange and, consequently, the Notes may cease to be qualified investments under the Tax Act. See Tax Qualified Investments. Index Disclaimer 66. S&P 500 : Standard & Poor s, S&P, S&P 500, Standard & Poor s 500, and 500 are trademarks of The McGraw Hill Companies, Inc. and have been licensed for use by the Issuer. No Certificate of Deposit will be sponsored, endorsed, sold or promoted by Standard & Poor s. Standard & Poor s makes no representation or warranty, expressed or implied, regarding the advisability of investing in securities generally or in any Certificate of Deposit particularly or the ability of the S&P 500 Index to track general stock market performance. Standard & Poor s only relationship to the Issuer is the licensing of certain trademarks and trade names of Standard & Poor s and of the S&P 500 Index which is determined, composed and calculated by Standard & Poor s without regard to the Issuer or any Certificate of Deposit.

12 Standard & Poor s has no obligation to take the needs of the Issuer or of any holder of a Certificate of Deposit into consideration in determining, composing or calculating the S&P 500 Index. Standard & Poor s is not responsible for and has not participated in the development of any Certificate of Deposit or in the determination or calculation of the equation by which interest is to paid on any Certificate of Deposit. Standard & Poor s has no obligation or liability in connection with administration, marketing or trading of any Certificate of Deposit. Standard & Poor s does not guarantee the accuracy and/or the completeness of the S&P 500 Index or any data included therein and Standard & Poor s shall have no liability for any errors, omissions or interruptions therein. Standard & Poor s makes no warranty, expressed or implied, as to results to be obtained by the Issuer, the holder of any Certificate of Deposit or any other person or entity from the use of the S&P 500 Index or any data included therein. Standard & Poor s makes no expressed or implied warranties, and expressly disclaims all warranties of merchantability or fitness for a particular purpose or use, with respect to the S&P 500 Index or any data included therein. Without limiting any of the foregoing, in no event shall Standard & Poor s have any liability for any special, punitive, indirect, or consequential damages (including lost profits) even if notified of the possibility of such damages. 67. HSBC OR THE INDEX SOURCE DO NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN, AND NEITHER HSBC NOR THE INDEX SOURCE SHALL HAVE ANY LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS THEREIN. THE INDEX SOURCE AND HSBC DO NOT MAKE ANY WARRANTY, EXPRESS OR IMPLIED, BY HSBC OR THE INDEX SOURCE AS TO ANY MATTER, INCLUDING THE RESULTS TO BE OBTAINED BY THE HOLDERS OF THE NOTES, OR ANY OTHER PERSON OR ENTITY, FROM THE USE OF THE INDEX OR ANY DATA INCLUDED THEREIN. ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSES OR USE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN ARE EXPRESSLY DISCLAIMED. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL HSBC OR THE INDEX SOURCE HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

13 PART III - OTHER DEFINITIONS Aggregate Principal Amount means in respect of the Global Note CAD$4,200,000 and in respect of each Note, its pro rata portion of the aggregate principal amount of the Global Note. Business Day means a day on which (i) commercial banks are open for business in Toronto, Ontario, New York, NY and London, UK (including dealings in foreign exchange and foreign currency deposits), (ii) book-entry transfers may be effected through CDS, and (iii) is (or but for the occurrence of an Extraordinary Event would have been) a trading day on the Principal Exchange, other than a day on which trading in such exchange is scheduled to close prior to its weekday closing time. If any date on which any action is otherwise required to be taken in respect of the Notes is not a Business Day, the date on which such action shall be taken shall be the next following day that is a Business Day and, if the action is the payment of the Aggregate Principal Amount or the Variable Coupon, no interest or other compensation shall be paid as a result of any such delay. Closing Value means, in respect of an Index, the official closing value for the Index as announced by the Index Source or any Successor Sponsor, provided that, if on or after the Index Set Date such Index Source or Successor Sponsor materially changes the time of day at which such official closing value is determined or no longer announces such official closing value, HSBC may thereafter deem the Closing Value to be the value of the Index as of the time of day used by the Index Source or Successor Sponsor to determine the official closing value prior to such change or failure to announce. Index Return will be determined by HSBC in accordance with the following formula: Index Return = Initial Index Level Final Index Level Initial Index Level subject to a minimum of 0% return Extraordinary Event means any bona fide event, circumstance or cause (whether or not reasonably foreseeable) beyond the control of HSBC or any person that does not deal at arm s length with HSBC which has or will have a material adverse effect on the ability of a dealer to hedge a position in respect of the Notes. An Extraordinary Event may include, without limitation, events such as the following: (i) (ii) (iii) (iv) the occurrence or existence on any Business Day during the one-half hour period prior to the scheduled close of regular trading on the Principal Exchange of any suspension of or limitation on trading (by reason of movements in price exceeding limits permitted by the Principal Exchange or otherwise) on the Principal Exchange in securities that comprise 20% or more of the level of an Index or a general limitation on prices for such securities on the Principal Exchange, a suspension, absence or material limitation of trading in future contracts, forward contracts or option contracts related to an Index on a Related Exchange, the enactment, publication, decree or other promulgation of any statute, regulation, rule or order of any court or other government authority which would make it unlawful or impracticable for HSBC to perform its obligations under the Notes or for dealers to hedge positions in respect of an Index, the taking of any action by any governmental, administrative, legislative or judicial authority or power, which has a material adverse effect on any financial market, or

14 (v) any outbreak or escalation of hostilities or other national or international calamity or crisis (including, without limitation, natural calamities) which has or would have a material adverse effect on the ability of HSBC to perform its obligations under the Notes or of a dealer to place or modify a hedge of a position with respect to an Index or a material and adverse affect on any economy or the trading of securities generally on the Principal Exchange. For the purposes of determining whether an Extraordinary Event has occurred (i) a limitation on the hours or number of days of trading will not constitute an Extraordinary Event if it results from an announced change in the regular business hours of the Principal Exchange, and (ii) an absence of trading on the Principal Exchange will not include any time when such exchange itself is closed for trading under ordinary circumstances. Final Index Level means, in respect of the Index, the Closing Level of the Index on the Final Index Set Date. Final Index Set Date means September 16, Index means, individually, the S&P 500 Index Set Date means September 16, Index Source means, in the case of S&P 500, Dow Jones and Company Inc. Initial Index Level means the Closing Value of the Index on the Index Set Date. Invested Amount means the amount invested by each Noteholder in the Notes, being a multiple of CAD$1,000, and a minimum amount of CAD$10,000. Issue Date means September 22, Maturity Date means the end of the day on September 22, 2009, or on such other date as may be selected by HSBC in its sole and absolute discretion. Principal Exchange means, in the case of S&P 500, the New York Stock Exchange. Related Exchange means, in respect of an Index, any additional stock exchange or quotation system on which shares included in the Index are listed and posted for trading or any exchange or quotation system in respect of which future contracts, forward contracts or option contracts are traded and through which HSBC effects or expects to effect, directly or indirectly, transactions to hedge its position in respect of the Notes. Variable Coupon will equal 100% of the Index Return. For the avoidance of doubt, if on the Final Index Set Date the Index Return is less than 0.00%, then the Note will be redeemed on the Maturity Date at 100% of the Aggregate Principal Amount. [Continued on the following page]

15 Hypothetical Example 1 (for illustration purposes only): In this scenario the Note would return the principal invested plus a variable return of 37% or a 8.19% annually compounded rate of return. S&P 500 Index Set Date 1000 Final Index Set Date 630 Index Return -37% Absolute Value of Index Performance if Negative 37% Participation 100% Redemption Proceeds at Maturity 137% Hypothetical Example 2 (for illustration purposes only): In this scenario the Note would return the principal invested. S&P 500 Index Set Date 1000 Final Index Set Date 1170 Index Return 17% Absolute Value of Index Peformance if Positive Participation Redemption Proceeds at Maturity 0% 100%