We report our results to HSBC in accordance with HSBC Group accounting and reporting policies ("Group Reporting Basis"), which apply International Financial Reporting Standards ("IFRSs") as issued by the International Accounting Standards Board ("IASB"). We typically have elected to apply FVO accounting to selected financial instruments to align the measurement attributes of those instruments under U.S. GAAP and the Group Reporting Basis and to simplify the accounting model applied to those financial instruments. We elected to apply FVO accounting to certain commercial loans held for sale, certain fixed-rate long-term debt issuances, all of our hybrid instruments, including structured notes and deposits, and certain client share repurchase transactions. Excluding the fair value movement on FVO liabilities attributable to our own credit spread, which is recorded in other comprehensive income (loss), changes in the fair value of FVO assets and liabilities and the related derivatives (including mark-to-market and realized gains and losses) are reported in gain (loss) on instruments designated at fair value and related derivatives in the consolidated statement of income. See Note 15, "Fair Value Option," in our 2025 Form 10-K for a discussion of our FVO assets and liabilities. There have been no significant changes in our FVO elections since December 31, 2025.


	Fair Value		Unpaid Principal Balance		Fair Value Over (Under) Unpaid Principal Balance
	(in millions)
At June 30, 2026
Commercial loans held for sale(1)	$	795	$	890	$	(95)

Client share repurchase asset	137		137		—

Fixed rate long-term debt	802		775		27
Hybrid instruments:
Structured deposits	3,752		3,372		380
Structured notes	7,890		7,499		391
Client share repurchase liability	137		137		—
At December 31, 2025
Commercial loans held for sale(1)	$	626	$	721	$	(95)
Client share repurchase asset	20		20		—


Fixed rate long-term debt	831		791		40
Hybrid instruments:
Structured deposits	3,570		3,260		310
Structured notes	7,435		7,093		342
Client share repurchase liability	20		20		—


	Loans Held for Sale		Long-Term Debt		Hybrid Instruments		Total
	(in millions)
Three Months Ended June 30, 2026
Interest rate and other components(1)	$	—	$	8	$	(595)	$	(587)
Credit risk component(2)	(18)		—		—		(18)
Total mark-to-market on financial instruments designated at fair value	(18)		8		(595)		(605)
Gain (loss) on related derivatives	—		(8)		601		593
Gain (loss) on instruments designated at fair value and related derivatives	$	(18)	$	—	$	6	$	(12)

Three Months Ended June 30, 2025
Interest rate and other components(1)	$	—	$	(5)	$	(452)	$	(457)
Credit risk component(2)	(1)		—		—		(1)
Total mark-to-market on financial instruments designated at fair value	(1)		(5)		(452)		(458)
Gain (loss) on related derivatives	—		7		450		457
Gain (loss) on instruments designated at fair value and related derivatives	$	(1)	$	2	$	(2)	$	(1)

Six Months Ended June 30, 2026
Interest rate and other components(1)	$	—	$	13	$	(394)	$	(381)
Credit risk component(2)	(20)		—		—		(20)
Total mark-to-market on financial instruments designated at fair value	(20)		13		(394)		(401)
Gain (loss) on related derivatives	—		(12)		396		384
Gain (loss) on instruments designated at fair value and related derivatives	$	(20)	$	1	$	2	$	(17)

Six Months Ended June 30, 2025
Interest rate and other components(1)	$	—	$	(21)	$	(264)	$	(285)
Credit risk component(2)	(8)		—		—		(8)
Total mark-to-market on financial instruments designated at fair value	(8)		(21)		(264)		(293)
Gain (loss) on related derivatives	—		25		264		289
Gain (loss) on instruments designated at fair value and related derivatives	$	(8)	$	4	$	—	$	(4)

The entire disclosure for a company's election to apply the fair value option for measurement and reporting of eligible financial assets and liabilities (as defined), as well as certain other eligible items (as defined) included in the statement of financial position, whether such option is elected for a single eligible item or a group of similar eligible items and is in addition to other disclosures concerning fair value which the company may be required to provide. Such disclosure might be expected to include: (1) for items included in the statement of financial position: (a) the reasons for electing a fair value option for each eligible item or group of similar eligible items; (b) if the fair value option is elected for some but not all eligible items within a group of similar eligible items: (i) a description of those similar items and the reasons for partial election and (ii) information of how the group of similar items relates to individual balance sheet line items; (c) for each line item in the statement of financial position that includes an item or items for which the fair value option has been elected: (i) information of how each line item in the statement of financial position relates to major categories of assets and liabilities presented in accordance with other fair value disclosures and (ii) the aggregate carrying amount of ineligible items included in each line item in the balance sheet, if any; (d) the difference between the aggregate fair value and the aggregate unpaid principal balance (assuming contractual principal amounts and fair value option elected) of: (i) loans and long-term receivables (other than securities otherwise reported at fair value) and (ii) long-term debt instruments; (e) for loans held as assets for which the fair value option has been elected: (i) the aggregate fair value of loans that are 90 days or more past due, (ii) if the policy is to recognize interest income separately from other changes in fair value, the aggregate fair value of loans in nonaccrual status, and (iii) the difference between the aggregate fair value and the aggregate unpaid principal balance for loans that are 90 days or more past due, in nonaccrual status, or both; (f) for investments that would have been accounted for under the equity method if the entity had not chosen to apply the fair value option, the information required for such investments, if material either individually or in the aggregate; (2) for items included in the income statement: (a) the amounts of gains and losses from fair value changes included in earnings and in which line in the income statement those gains and losses are reported whether or not combined with gains and losses from items required to be accounted for at fair value; (b) a description of how interest and dividends are measured and where they are reported in the income statement; (c) for loans and other receivables held as assets: (i) the estimated amount of gains or losses included in earnings attributable to changes in instrument-specific credit risk and (ii) how the gains or losses attributable to changes in instrument-specific credit risk were determined; (d) for liabilities with fair values that have been significantly affected during the reporting period by changes in the instrument-specific credit risk: (i) the estimated amount of gains and losses from fair value changes included in earnings that are attributable to changes in the instrument-specific credit risk, (ii) qualitative information about the reasons for those changes, and (iii) how the gains and losses attributable to changes in instrument-specific credit risk were determined; and (3) certain other disclosures as required or determined to be provided.

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+ Details