HSBC : settles foreign exchange investigation with the US Department of Justice - Announcement made to the HK stock exchange - English (3-page PDF 146KB)

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HSBC Holdings plc

Overseas Regulatory Announcement

The attached announcement has been released to the other stock exchanges on which HSBC Holdings plc is listed.

The Board of Directors of HSBC Holdings plc as at the date of this announcement comprises: Mark Tucker*, Stuart Gulliver, Phillip Ameen† , Kathleen Casey† , Laura Cha† , Henri de Castries† , Lord Evans of Weardale† , Joachim Faber† , Irene Lee† , John Lipsky† , Iain Mackay, Heidi Miller† , Marc Moses, David Nish† , Jonathan Symonds† , Jackson Tai† and Pauline van der Meer Mohr† .

* Non-executive Group Chairman † Independent non-executive Director

Hong Kong Stock Code: 5

HSBC Holdings plc

Registered Office and Group Head Office:

8 Canada Square, London E14 5HQ, United Kingdom Web:www.hsbc.com

Incorporated in England with limited liability. Registered in England: number 617987

18 January 2018

HSBC SETTLES FOREIGN EXCHANGE INVESTIGATION

WITH THE US DEPARTMENT OF JUSTICE

HSBC Holdings plc has entered into a three-year deferred prosecution agreement with the

US Department of Justice (DoJ) to resolve the DoJ's investigation into HSBC's historical foreign exchange sales and trading activities within its Global Markets business.

Under the agreement, HSBC will pay a total of US$101.5m, including a US$63.1m fine and US$38.4m in restitution. The payment reflects a 15% reduction in the fine amount in recognition of HSBC's cooperation during the investigation and its extensive remediation. The payment has already been fully provided for as disclosed in HSBC's 2016 Annual Report and Accounts and the Interim Report 2017.

HSBC has also agreed to take additional steps to enhance its Global Markets compliance programme and internal controls and agreed to cooperate fully with regulatory and law enforcement authorities.

The conduct described in the agreement occurred in 2010 and 2011. Since then, HSBC has introduced a number of measures designed to make the control environment in its Global Markets business more robust. The DoJ recognises these extensive improvements, noting that HSBC has dedicated significant resources to strengthening its systems and controls. As described in the agreement, HSBC's improvements in this area include, among other things:

• • implementing algorithmic trading to manage risk around benchmark orders;

• • updating its policies for sales, pricing, order handling, managing confidential client information and conflicts of interest, pre-hedging, and market abuse; and

• • engaging outside firms to audit its internal controls and to enhance its trade, voice, and audio surveillance.

HSBC is committed to ensuring fair outcomes for its customers and protecting the orderly and transparent operation of the markets.

This agreement follows earlier settlements relating to HSBC's FX trading business with the

UK Financial Conduct Authority and US Commodity Futures Trading Commission in November 2014 and with the US Federal Reserve Board in September 2017 related to controls and procedures.

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Registered Office and Group Head Office:

8 Canada Square, London E14 5HQ, United Kingdom Web:www.hsbc.com

Incorporated in England with limited liability. Registered number 617987

HSBC settles foreign exchange investigation with the US Department of Justice/2

Media enquiries to:

Jezz Farr Adam Bradbery

+44 (0) 20 7991 3124 +44 (0) 20 7991 8164

jezz.farr@hsbc.comadam.bradbery@hsbc.com

Investor enquiries to:

Richard O'Connor

+44 (0) 20 7991 6590

richard.j.oconnor@hsbc.com

Note to editors:

HSBC Holdings plc

HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 3,900 offices in 67 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2,526bn at

30 September 2017, HSBC is one of the world's largest banking and financial services organisations.

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