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Published on 6/11/2008 in the Prospect News Structured Products Daily.

New Issue: Nuveen, Merrill to sell up to $250 million Elements tied to S&P Commodity Trends for HSBC

By Angela McDaniels

Tacoma, Wash., June 11 - HSBC USA Inc. will sell up to $250 million of 0% Elements exchange-traded notes due June 16, 2023 linked to the S&P Commodity Trends Indicator - Total Return via Nuveen Investments and Merrill Lynch & Co., according to a 424B2 filing with the Securities and Exchange Commission.

The company sold an undisclosed portion of the notes on June 10, and the remainder will be sold from time to time.

The S&P Commodity Trends Indicator - Total Return is a diversified composite of 16 physical commodity futures grouped into six sectors. It positions each of these sectors either long or short - except energy, which is always positioned either long or flat - based on its price behavior relative to its exponential moving average. HSBC USA said this long/short exposure gives the ETNs the capability to benefit from both rising and declining price trends in the commodities markets.

The payout at maturity will be par plus the index return, less an annual investor fee equal to 0.75% multiplied by the proportion of days elapsed.

The notes are putable at any time, subject to a minimum put requirement of $2.5 million of notes. Beginning June 16, 2011, HSBC USA can call the notes if $5 million principal amount or less remains outstanding.

In both cases, the payout will be determined in the same manner as the payout at maturity.

The company said it plans to list the notes on NYSE Arca under the symbol "LSC."

Issuer:HSBC USA INC.
Issue:Elements exchange-traded notes
Underlying index:S&P Commodity Trends Indicator - Total Return
Amount:Up to $250 million
Maturity:June 16, 2023
Coupon:0%
Price:Par
Payout at maturity:Par plus the index return minus an annual investor fee of 0.75%
Put:At any time, subject to a minimum of $2.5 million of notes
Call option:From June 16, 2011 onward if $5 million of notes or less remains outstanding
Initial index level:2,089.68
Final index level:The average of the index's closing levels on the five trading day ending on the final valuation date
Pricing date:June 10
Settlement date:June 16
Underwriters:Nuveen Investments and Merrill Lynch & Co.

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