SEC no-action letter: The Hongkong and Shanghai Banking Corporation Limited and HSBC Bank plc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

DIVISION OF
TRADING AND MARKETS March 24, 2015
Pamela Shores, Esq.
Linklaters

lOth Floor, Alexandra House

18 Chater Road

Hong Kong
Re: The Hongkong and Shanghai Banking Corporation Limited and HSBC Bank pic File No. TP 15-10 Dear Ms. Shores:
In your letter dated March 24, 2015, 1 as supplemented by conversations with the staff, you request on behalf ofThe Hongkong and Shanghai Banking Corporation Limited, a company incorporated in Hong Kong ("HSBC"), and HSBC Bank plc ("HSBC Bank"), a company incorporated in England, an exemption from Rule 101 of Regulation M under the Securities Exchange Act of 1934 ("Exchange Act") in connection with a conditional share exchange offer by CK Global Investments Limited (the "Offeror"), a wholly owned subsidiary of CKH Holdings (the "Exchange Offer" or the "Hutchison Scheme").2 You seek an exemption to permit the Global Markets Divisions3 ofHSBC and HSBC Bank to conduct specified transactions (or "Market Activities") outside the United States in the ordinary shares ofCK Hutchison Holdings Limited ("CKH Holdings Shares") and American Depository Receipts representing CKH Holdings Shares (the "ADRs") during the Exchange Offer. Specifically, you request that the Global Markets Divisions be permitted to continue to engage in derivative arbitrage and hedging activities, as well as stock borrowing and lending activities, as described in your letter. You also seek an exemption to permit the Global Markets Divisions to conduct specified transactions in the United States in CKH Holdings Shares and ADRs during the Exchange Offer. Specifically, you request that the Global Markets Divisions be permitted to continue to engage in 1 We have attached a copy of your letter. Each defined term in our response has the same meaning as defined, directly or by reference, in your attached letter, unless we note otherwise. 2 In your letter, you state that HSBC, through its Banking and Capital Financing Division, is the sole fmancial advisor to Cheung Kong, CKH Holdings, and the Offeror in connection with the Exchange Offer and, therefore, may be deemed a "distribution participant" for purposes of Rule 101 ofRegulation M. 3 In your letter, you state that Global Markets Divisions may be deemed to be "affiliated purchasers" ofHSBC and, therefore, subject to Rule 101 of Regulation M.

Pam Shores, Esq.
March 24,2015 limited derivative arbitrage and hedging activities, as well as stock borrowing and lending activities, in the United States, as described in your letter. Response:
Based on the facts and representations that you have made in your letter, but without necessarily concurring in your analysis, the Securities and Exchange Commission ("Commission") finds that it is necessary or appropriate in the public interest, and is consistent with the protection ofinvestors, to grant, and hereby grants, HSBC and HSBC Bank an exemption from Rule 101 of Regulation M to permit the Global Markets Divisions to continue to engage in the transactions described in your letter during the Exchange Offer. This exemption is subject to the following conditions:

1. None ofthe transactions ofthe Global Markets Divisions described in your letter shall
   occur in the United States, with the exception ofthe limited derivative arbitrage and hedging activities, as well as stock borrowing and lending activities, as described in your letter;
2. All ofthe transactions described in your letter for which you seek relief shall be effected
   in the ordinary course ofbusiness and not for the purpose of facilitating the Exchange Offer;
3. The documents distributed to U.S. investors in connection with the Exchange Offer will
   disclose the possibility of, or the intention to engage in, the transactions described in your letter;
4. HSBC, HSBC Bank, and the Global Markets Divisions will provide to the Commission's
   Division ofTrading and Markets ("Division"), upon request, a time-sequenced schedule of all such transactions made during the Exchange Offer. Such schedule will include:
   (a) size, broker (if any), time of execution, and price ofthe transactions; (b) the exchange, quotation system, or other facility through which the transactions occurred; and (c) whether the transactions were made for a customer account or a proprietary account;
5. Upon request of the Division, HSBC, HSBC Bank, and the Global Markets Divisions will
   transmit the information requested in item 4 (above) to the Division at its offices in Washington, D.C., within 30 days ofits request;
6. HSBC, HSBC Bank, and the Global Markets Divisions shall retain all documents and
   other information required to be maintained pursuant to this letter for at least two years following the completion of the Exchange Offer;

Pam Shores, Esq.
March 24,2015
7. Representatives of HSBC, HSBC Bank, and the Global Markets Divisions shall be made
available (in person at the offices of the Commission in Washington, D.C ., or by telephone) to respond to inquiries ofthe Division relating to their records ; and
8. Except as otherwise directed by this letter, HSBC, HSBC Bank, and the Global Markets
Divisions will comply with Regulation M.
This exemption is based solely on the facts presented and the representations made in your letter. Any different facts or circumstances may require a different response. In the event that any material change occurs with respect to any ofthose facts or representations, transactions in the CKH Holdings Shares and ADRs must be discontinued, pending presentation of the facts for our consideration. In addition, your attention is directed to the anti fraud and anti~manipulation provisions ofthe Exchange Act, including Sections 9(a) and lO(b), and Rule 10b~5 thereunder. Responsibility for compliance with these and any other applicable provisions ofthe federal securities laws must rest with the participants in the various transactions. We express no view with respect to any other questions that the proposed transactions may raise, including, but not limited to, the adequacy of disclosure concerning, and the applicability of any other federal or state laws to, the proposed transactions. For the Commission,

by the Division ofTrading and Markets,

pursuant to delegated authority, 4

Josephine J. Tao
Assistant Director
Attachment
4 17 CFR 200.30-3(a)(6).

Linklaters Linklaters
1Oth Floor, Alexandra House 1¥ ~'1 t4! Bili Jifr Chater Road Hong Kong ~~Hlliff.~lii©IO J'l,!i Telephone 11!fu5 : +852 2842 4888 Facsimile JWE: +852 2810 8133/2810 1695 Josephine J . Tao Assis tan t Director Division of T radin g and Markets Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 March 24 , 2015 Re : The Hongkong and Shanghai Banking Corporation Limited and HSBC Bank pic￾Request for Exemptive Relief from Rule 101 of Regulation M Dear Ms. Tao:
We are writing on behalf of The Hongkong and Shanghai Banking Corporation Limited ("HSBC"), a company incorporated in Hong Kong , and HSBC Bank pic ("HSBC Bank"), a company incorporated in England , about the application of Regulation M to transactions by the Global Markets Divisions (the "Global Markets Divisions") of HSBC and HSBC Bank in the ordinary shares of CK Hutchison Holdings Limited ("CKH Holdings Shares"} and unsponsored American Depositary Receipts ("ADRs"} representing CKH Holdings Shares . HSBC and HSBC Bank are subsid iaries of HSBC Holdings pic (together with its subsidiaries , the "HSBC Group"), a compan y incorporated in Eng land . Th e request for relief relates to transactions to be undertaken by t he Global Markets Divisions during the distribution of CKH Holdings Shares in connection with the Hutchison Scheme (as defined below). 1 Background to the Transactions On January 9, 2015 , Cheung Kong (Holdings) Limited ("Cheung Kong" and together with its subsidiaries , the "Cheung Kong Group"), a company incorporated in Hong Kong and whose sha res were listed on the Main Board of T he Stock Exchange of Hong Kong Limited (the "Stock Exchange of Hong Kong"), and Hutchison Whampoa Limited ("Hutchison" and together with its subsidiaries , the "Hutchison Group"), a company incorporated in Hong Kong and whose shares are listed on the Stock Exchange of Hong Kong , announced the transactions (the "Transactions") described below.
1.1 The Cheung Kong Reorganization
The hold ing company of the Cheung Kong Group wou ld be changed from Cheung Kong to CK Hutchison Holdings Limited ("CKH Holdings" and together with its subsidiaries, the "CKH Holdings Group"), a company incorporated in the Cayman Islands , by way of a scheme of arrangement pursuant to Division 2 of Part 13 of the Companies Ordinance, Chapter 622 of the Laws of Hong Kong (the "Cheung Kong Reorganization"). CKH Hold ings would become the new parent company of the Cheung Kong Group . A list of the names of the principals. solicitors and reg istered foreign lawyers of Linklaters in Hong Kong is open to inspection at its registered office at 10th Floor, Alexandra House, Chater Road , Hong Kong Lmklaters Hong Kong is a law firm affiliated w1th Linklaters LL P, a limited liabili ty partnership registered in England and Wales with registered number OC326345. It is a law firm authorised an d regulated by the Solicitors Regulation Authonty. The term partner in relation to Li nkla ters LLP is use d to refer to a member of the LLP or an employee or consultant of Lmklaters LLP or any o f 1ts affiliated firms or entitles w 1th equ1va 1ent standmg and qualifications. A list of the n ames of the members of Linklaters LLP and of the non-members who are designated as partners and th eir profess1ona1 qualificatio ns is open to 1nspecbon at its registered office, One Silk Street, London EC2Y 8HQ, England or on www.linklaters.com and such persons are either solicitors, registe red foreign lawyers or European lawyers. Please refer to www.llnklaters .com/regulation for important information on o ur regula tory position .

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Following the change of the holding company, the CKH Holdings Group would continue to be substantially the same as the Cheung Kong Group save for changes to its legal structure. The implementation of the Cheung Kong Reorganization would not affect the business, net assets , liabilities or financial position of the Cheung Kong Group , save for certain professional costs relat ing to the establishment of CKH Holdin gs and the Cheung Kong Reorgan izatio n that would be incurred . In addition, (i) the ownership , voting control and management of the Cheung Kong Group would , through CKH Holdings , remain unchanged ; (ii) the interests of Cheung Kong in its subsidiaries would rema in unaffected ; (iii) the Cheung Kong shareholders eligible to receive CKH Holdings Shares in the scheme would hold the same proportionate interests in CKH Holdings as they held in Cheung Kong at the record date; and (iv) the payment of dividends would not be affected . The existing Cheung Kong directors are also the CKH Holdings directors. The rights of holders of CKH Holdings Shares would be governed by the laws of the Cayman Islands and the articles of association of CKH Holdings. The Cayman Islands is one of the jurisdictions accepted by the Stock Exchange of Hong Kong for issuers seeking a listing , with the rights of shareholders under the laws of the Cayman Islands being co nsidered to be broadly commensurate with the rights of shareholders under the laws of Hong Kong . Following the Cheung Kong Reorganization , one CKH Holdings Share would represent substantively the same investment in the same business that one ordinary share in Cheung Kong represented prior to the Cheung Kong Reo rgan ization. CKH Holdings Shares would be publicly traded on the Stock Exchange of Hong Kong . All of the ordinary shares of Cheung Kong ("Cheung Kong Shares") in issue would be cancelled and eligible sha reholde rs of Cheung Kong would receive one CKH Holdings Share for every one Cheung Kong Share. Cheung Kong would become a subsidiary of CKH Holdings. The scheme document and proxy forms re lating to the Cheung Kong Reorganization were distributed to Cheung Kong shareholders , including shareholders in the United States , on February 6, 2015. The shareholder meeting was held on February 25 , 2015 , and the scheme was approved by the Che ung Kong shareholders with over 99% of the votes cast supporting the proposa l. Following approval of the scheme by the Court of First Instance of the High Court of Hong Kong (the "Court") and the satisfaction of certain additional condition s precedent, the CKH Holdings Shares were listed on the Stock Exchange of Hong Kong on March 18, 2015. The Cheung Kong Shares were delisted from the Stock Exchange of Hong Kon g on the day of and immediately before the listing of the CKH Holdings Shares . 1 The new CKH Holdings Shares , as the ordinary shares of the successor issuer of the Cheung Kong S hares , have taken the place of the Cheung Kong Shares and the
activities with respect to the Cheung Kong Shares have transferred to the new CKH Holdings Shares. The CKH Holdings Shares have replaced the Cheung Kong Shares in the Hang Seng Index. HSBC and HSBC Bank believe t hat the future trading vo lum e and distribution by market for CKH Holdings Shares shou ld be substantially the same as the historical trading volume and distribution by market for Cheung Kong Shares. Cheung Kong Shares were, and the new CKH Holdings Shares are , traded in the over-the-counter market in the United States. Unsponsored ADRs represen ting Cheung Kong Shares have historically traded in the over-the-counter market in the United States . 2 ' The Cheung Kong Reorganization was not subject to the requirements of the Code on Takeovers and Mergers (the "Takeovers Code") in Hong Kong because (i) there was no substantial change in percentage shareholding of any sha reholder ; (i i) the re was no acquisition or co nsolidation of control by any person or a group of persons ; and (iii) shareholders ' econom ic interests in Cheu ng Kong were not affected by implementation of the scheme. The ADR programs re lating to Cheu ng Kong Shares are unsponsored and were established by depositary ban ks withou t the participation or consent of Cheung Kong . Since nei ther Cheung Kong nor C KH Holdings is invo lved in any ADR p rograms , HSBC and HSBC Bank cannot provide information with respect to their establishment or main tenance. A19 350061 Page 2 of 12 2

Linklaters

CKH Hold ings Shares delivered pursuant to the Cheung Kong Reorgan ization were issued in the United States without registratio n under t he Securi ties Act of 1933 (the "Securities Act") pursuant to Section 3(a)(1 0) thereof.
1.2 The Merger Proposa l
The Hutchison Group proposes to acquire approximately 6.24% of the common sha res of Husky Energy Inc . ("Husky"), a company incorporated in Alberta, Canada , the sha res of which are listed on the Toron to Stock Exchange (the "Husky Share Exchange"). In addition , CK Global Investments Limited (the "Offeror"), a who lly owned subsidiary of CKH Ho ldings , is making a conditiona l share exchange offer to the shareho lders of Hutchison for the cancellation of all the ordinary shares of Hutchison (" Hutchison Shares") in issue (other than shares held by ce rtain subsidiaries of CKH Holdings) by way of a scheme of arrangement pursuant to Division 2 of Part 13 of the Companies Ordinance , Chapter 622 of the Laws of Hong Kong (the "Hutchison Scheme" and together with the Husky Share Exchange , the "Merger Proposal"). Eligible shareholders in Hutchison will receive new CKH Holdings Shares at the share exchange ratio of 0.684 of a new C KH Holdings Sha re for every one Hutchison Share with no cash element, and this share exchange ratio was determ ined based on the average clos ing prices of the Cheung Kong Shares and the Hutchison Shares on the Stock Exchange of Hong Kong for the five trading days up to (and including) January 7, 2015, without any premiu m or discount. Upon co mp letion of the Hutchison Scheme, Hutchison will become a wholly own ed subsid iary of CKH Holdings . The scheme document and proxy forms relating to the Hutchison Scheme are expected to be distributed to Hutchison shareholders , including shareholders in the United States, on or around March 31, 20 15, and the shareholder vote to approve the Hutchison Scheme is expected to be held three to fo ur weeks later. The making of the offer by the Offeror pursuant to the Hutch ison Scheme is also subject to the approval of CKH Holdings shareholders who satisfy certain independence criteria unde r the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules ") because the Hutchison Scheme constitutes a "very substantial acq uisition" for CKH Holdings under Chapter 14 of the Listing Rules and also a "connected transaction " as defined in Chapter 14A of the Listing Rules . A sha reholder circular and proxy forms relating to the Hutchison Scheme are expected to be distributed to CKH Holdings shareholde rs , including shareholders in the United States , on the same date as the distribution of the scheme document and proxy forms to Hutchison shareho lders, and the vote by CKH Holdings shareholders is expected to be held on the same date as the vote by Hutchison shareholders to approve the Hutchison Scheme. Assuming the Hutchison Scheme is approved by the shareholder votes , and subject to Court approval of the Hutchison Scheme and the satisfaction of certain additional conditions precedent, the Me rger Proposal is expected to be comp leted by the end of June 2015. Hutchison Shares , unsponsored ADRs representing Hutch iso n Sha res and common
shares of Husky are traded in the over-the-counter market in the United States . CKH Holdings Shares delivered pursuant to the Hutchison Scheme will be issued in the United States without regist ration under the Securit ies Act pursuant to Section 3(a)(1 0) thereof.
1.3 The Spin -off Proposal
Immediate ly following the Merger Proposal , certain property assets of CKH Holdi ngs will be spun off and listed on the Stock Exchange of Hong Kong (the "Spin-off Proposal"). The Spin-off Proposal is co nditiona l upon , among other things, completion of the Cheung Kong Reorganization and the Merger Proposal described above. Certain property assets of the CKH Hold ings Group and the Hutchison Group A 19350061 Page 3 of 12

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are proposed to be reo rganized and held by Cheung Kong Property Holdings Limited ("CK Property"), which will at that time be whol ly owned by CKH Holdings . CK Property will then issue new ord inary shares ("CK Property Shares") to eligible CKH Holdings shareholders by way of a distribution in specie at the distribution ratio of one CK Property Share for every one CKH Holdings Share then held . Application will be made to list the CK Property Shares on the Stock Exchange of Hong Kong . Listing is expected to take place on the same date as the completion of the Merger Proposal. 3 CK Property Shares del ivered pursuant to the Spin-off Proposal are expected to be distributed in the United States to a lim ited number of CKH Holdings sha reholders that are "qua lified institutional buyers", as defined in Rule 144A under the Securities Act, in transactions exempt from registration under Sectio n 4(a)(2) of the Securities Act. HS BC is the so le financial advisor to Cheung Kong , CKH Holdings and the Offeror in relation to the Cheung Kong Reorganization and the Merger Proposal and a sponsor of the Spin-off Proposal. Requested Rel ief We respectfu lly request on behalf of HSBC and HSBC Bank that the Staff (the "Staff') of the Securities and Exchange Commiss ion (the "SEC") grant exemptive relief from , or will not recommend that the SEC take enforcement action under, Rule 101 of Regu lation M in connection with the Global Markets Divis ions' engaging in the Market Activities described below in the ordinary cou rse of the ir respective businesses as described below and in accordance with applicable local law. Moreover, each of HSBC and HSBC Ban k confirms that the Market Activities described below will not, in any wa y, be conducted in furtherance of or to faci litate the Transactions . In addition , the Market Activi ties described below in respect of CKH Hold ings Shares and ADRs representing CKH Holdings Shares will be substantially the same in nature and extent as the HSBC Group's historical market activities in respect of Cheung Kong Shares and ADRs representi ng Cheung Kong Shares . The "Market Activities" conducted by the Global Markets Divisions will include the following :

• Derivative Arbitrage and Hedging: The Global Ma rkets Divisions may so licit and effec t
  trades in CKH Holdings Shares and ADRs for their own accounts and for the accounts of their respective customers for the purpose of derivative arbitrage or hedging activities, such as c losing out existing derivatives or delta hedging in respect of existing derivatives, index-related or tracker fund arbitrage or similar acti vities in connection with the Globa l Markets Divisions' derivatives market-making activities .
• Securities Borr owing and Lending: The Global Markets Divis ions may engage in
  borrowing and lending transactions in CKH Holdings Shares and ADRs (including the unwinding of such transactions ) with their customers . These transactions in CKH Holdings Shares may be effected on the Stock Exchange of Hong Kong and in the over-the-counter markets in Hong Kong and the United States or, in the case of ADRs, in the over-the￾counter markets in the United States , and, in some cases, elsewhere outside the United Sta tes. 4 The availability of the exemptive and/or no-action relief HSBC and HSBC Bank are requesting would be conditioned on the disclosure and record-keeping undertakings and obligations outlined below. The timi ng of events contem plated in re lation to the T ransact ions described above may vary .
• The majority of the Market A ctivities for which rel ief is soug ht in this letter will be conducted on the S tock Exchange of Hong
  Ko ng.
  A19350061 Pag e 4 of 12

Linklaters

We are acting as U.S. counsel to HSBC and HSBC Bank in connection with the matters described in this letter. HSBC and HSBC Bank have provided us w ith, and authorized us to make on their behalf , the factual representations set forth in this letter. The statements conta ined in this letter w ith res pect to Hong Kong regulati on have been reviewed by Linklaters , Hong Kong cou nse l to HSBC and HSBC Ban k. 3 Description of the Market Activities
3.1 Backg round and Mark et for the CKH Holdings Shares and A DRs
The following information in respect of Cheung Kong Shares and ADRs is provided because HSBC and HSBC Bank believe that it provides the most informative data with rega rd to the expected trading volume in CKH Holdings Shares and ADRs after the issuance of CKH Holdings Shares and admission to trading. As the CKH Holdings Shares represent the successor shares to the Cheung Kong Shares , HSB C and HSBC Bank bel ieve t hat the future trading vol ume and distribution by market for CKH Holdings Shares and ADRs can be expected to be in line with the historical trading vo lume and distribution by market for Cheung Kong Shares and ADRs . Unti l March 18, 2015 , the Cheung Kong Shares were listed on th e Stock Exch ange of Hong Kong , and their principal trad ing market was in Hong Kong . During 2014, the average dail y trading volume of Cheung Kong Shares on the Stock Exchange of Hong Kong was approximately 3.53 million Che ung Kong Shares, or appro xima tel y HK$468 million (or approximatel y U.S.$60.3 million at the exchang e rate on December 3 1, 2014) in value , which represented approximately 96.8 % of the aggregate average dail y trading volume of Cheung Kong Sha res (inc ludin g Cheung Kong Sha res represented by ADRs ) on the Stock Exchange of Hong Kong and in the over-the-co unter markets in Hong Kong and the United Sta tes ("Cheung Kong ADTV"). As of De cember 31 , 2014 , Cheung Kong 's aggregate market capital ization was approximately HK$30 1,796 million (or approximately U.S .$38 ,915 million at the exchan ge rate on December 31 , 20 14) and Cheung Kong 's free-float adjusted market capitalization was approximately HK$ 170 ,635 mi llion (or approximately U.S.$22,002 million at the exchange rate on Decemb er 31 , 20 14). As of Decemb er 31, 201 4 , Cheung Kong was the 15th largest Hong Kon g-listed compa ny in terms of ma rket capitalization . Cheung Ko ng Shares (incl uding C heung Kong Shares represented by ADRs ) have historically traded in the over-the-cou nter market in the United States . During 2014, the average daily trading volume of Cheung Kong Sh ares (including Cheung Kong Shares represented by ADRs) tra ded in the over-the￾counte r market in the United States was approximately 11 7,36 1 Cheung Kong Sha res, or approximately U.S.$2 million in value .
3.2 T he G lobal Markets Divisions
In the ord inary co urse of their businesses , the Global Markets Divisions have historically con ducted an extensive arra y of trad ing and other market activities in conn ection with Cheung Kong Shares and ADRs. The activities described bel ow involving CKH Holdings Shares and ADRs are expected to be unchanged in nature and exte nt from activities involving Cheung Kong Shares and ADRs prior to the completion of the Cheung Kong Reorganization . The Globa l Markets Divisions operate separately from other business divisions within the HSBC Group. The Global Markets Divisions cond uct full-services securities businesses throughout the world , and their principal executi ve offices are located in London . The Market Activ it ies described below, for which the Global Markets Divisions are requesting relief, are managed principally by representatives in Hong Kong and Londo n. The operations of the Global Markets Divisions are condu cted through en titi es regulated by and licensed under the Securities and Futures Ord inance (Cap. 57 1 of the Laws of Hong Kong) (the A 19350061 Page 5 of 12

Linklaters

"SFO"), as enforced by the Securities and Futures Commission of Hong Kong (the "SFC"), in Hong Kong and the Fina ncial Services and Markets Act 2000 , as enforced by the Bank of England Prudential Regulation Authority and the Financial Conduct Authority, in the United Kingdom , among other laws and regulations . HSBC and HSBC Bank sought and were granted "exempt principal trader" (" EPT") status for the Globa l Markets Divisions by the SFC in its exemptive letter dated December 2 , 2014 (the "Exemptive Letter"). EPT status provides exemptive relief to the Global Markets Divisions in relation to certain restrictions under the SFC 's Takeovers Code to allow them to continue to engage in certain dealing activities that would otherwise be restricted during the Transactions. This relief is described in greater detail under the heading "The Hong Kong Regulatory Market". HSBC and HSBC Bank have confirmed that the Market Activities described below, for which they are requesting relief, are permitted under and will be conducted in accordance with applicable Hong Kong laws and regulations and the Exemptive Letter, or at any t ime they are potentially prohibited by the Takeovers Code, HSBC and HSBC Bank will seek additional exemptive relief from the SFC. HSBC and HSBC Bank maintain and enforce w ritten policies and procedures that are reasonabl y designed to prevent the transfer of information to or from the Global Markets Divisions (the "Information Barriers"). These Information Barriers are intended to prevent improper motives from influencing the purchasing activity of the Global Markets Divisions and to prevent the flow of confidential information between the senior management and corporate development teams of other members of the HSBC Group on the one hand , and the trading and investment management personnel of the Global Ma rkets Divisions on the othe r hand . In co nnection with the Market Activities of the Global Markets Divisions , HSBC , HSBC Bank and the Global Markets Divisions will comply with the applicable requirements under Hong Kong , English and U.S. law, incl uding the applicable rules and regulations of the relevant exchanges and trading facilities . 3 .3 The Market Activities
3.3.1 Derivative arbitrage and hedging
The Global Markets Divi sions con duct derivatives market-making activities and manage these activities principally from Hong Kong and London . These activities are conducted pri marily outside the United States . As a result of t hei r EPT status in Hong Kong , the Global Markets Divisions are perm itted to continue to conduct certain of these activities during the Transa ctions, includ ing the purchase and sale of currentl y existing derivative products for their own accou nts and for the accounts of their respective customers on the Stock Exchange of Hong Kong . These derivative products may include currently existing options , warrants , co nvertible securities and other structured products that are exercisable for or convertible into, or the value of which is determined by refere nce to, CKH Holdings Shares or ADRs or third-party baskets or indices including CKH Holdings Shares or ADRs . The derivatives market making of the Globa l Markets Divisions permitted due to their EPT status invo lves pu rchasing and selling currently existing derivatives related to CKH Holdings Shares and ADRs in order to facil itate customer orders and provide liquidity to the market. As a result of their respective derivatives market-making activities , the Global Markets Divisions maintain varying positions in these derivatives , and their respective financial exposure to movements in the price of the underlying shares or ADRs varies from time to time . In order to manage this financial exposu re , the Global Markets Divisions regularly engage in derivative arbitrage and hedging activi ties. As a result of their EPT status in Hong Kong , the Global Markets Divisions are permitted to continu e to conduct certain of these activities during the Transa ction s, such as closing out existing derivatives, delta hedging in respect of existing derivatives, index-rel ated and trac ker fund arbitrage and sim ilar activities assen ted to A19350061 Page 6 of 12

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by the SFC that involve, in whole or in part, purchases and sales of CKH Hold ings Shares and ADRs for the Global Markets Divisions' own accounts or for the accounts of their respective customers . These Market Activities are incidental to the Global Markets Divisions ' acting as market makers in currently existing derivatives relating to CKH Holdings Shares and ADRs .
3.3.2 Securities borrowing and lending
Th e Global Markets Divisions engage in borrowing and lending transactions in shares and ADRs (includ ing the unwinding of such transactions) with their customers (including affiliates of the Global Markets Div isions ) in order to faci litate the settlement of trades, coverage of short positions and othe r transactions for which borrowed secu rities are commonly used . These securities borrowing and lend ing transactions are conducted at the request of the customer and involve secu rities designated by the customer, whic h may include CKH Holdings Shares or ADRs. In some circumstances , a customer may purchase CK H Holdi ngs Shares or ADRs from a third party in anticipation of lending them to one of the Global Markets Divisions , or a customer may arrange for a third party to purchase CKH Holdings Shares or ADRs after the customer has borrowed them from the Global Markets Divisions. The Global Markets Divisions engage in the Market Activities described above sole ly in the ordinary course of business and not in furtherance of or to facilitate the Transactions . These Market Activities may be effected on the Stock Exchange of Hong Kong and in the over-the-counter markets in Hong Kong and the United States or, in the case of ADRs , in the over-the -coun ter markets in the United States , and , in some cases , elsewhere outside the United States . The majority of the Market Activities for which re lief is sought in this letter wi ll be conducted on the Stock Exchange of Hong Kong . During 2014 , the Market Activities involving Cheung Kong Shares (including Cheung Kong Shares represented by ADRs ) accounted for approximately 7. 8% of Cheung Kong ADTV. In con nection with the Market Activi t ies, HSBC 's and HSBC Bank 's affiliated U.S. broker-deale r, HSBC Securities (USA) Inc., may execu te orders in the over-the-counter market in the United States on behalf of the Global Markets Divisions or customers of the Global Markets Div isions. HSBC and HSBC Bank estimate that less than 5% of the Market Activities occur in the United States. During 20 14, the Market Activities involving Cheung Kong Shares (including Cheung Kong Shares re presented by ADRs ) in the United States accounted for less than 1% of Cheung Kong ADTV. The Market Activities described above involving CK H Holdings Shares and ADRs a re expected to be unchanged in nature and extent from those involving Cheung Kong Shares and ADRs prior to the completion of the Cheung Kong Reorganization . 4 Application of Regulation M
4.1 Relief Requested
We respectfu lly request that the Staff grant exemptive relief from , or confirm that the Staff will not recommend that the SEC take enforcement action under, Rule 101 of Regulation M in connection with the Market Activi ties in which the Global Markets Divisions may engage in the ordinary course of their respective businesses in accordance with app licable local law. The availability of the exemptive and/or no-action relief HSBC and HSBC Bank are requesting would be conditio ned on the disclosure and record-keeping undertakings and obligations outlined below. 4 .2 Discussion In conn ection with the Hutchison Scheme, CKH Holdings Shares will be distributed to U.S. investors and CKH Holdings will be engaged in a distribution in the United States for purposes of Regulation M. We A19350061 Page 7 of 12

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have assumed that, under Regulation M, the restricted period (the "Regulation M Restricted Period ") will begin on or around March 31, 2015, when the materials in connection with the Hutchison Scheme are distributed , and w ill end following appro va l by the Hutc hison shareholders of the Hutchi son Scheme at the shareholders ' meeting . Thus , the Regulation M Restricted Period may last several weeks. HSBC , through its Ban king and Capital Financing Division in Hong Kong , is a financial advisor to Cheung Kong , C KH Hold ings and the Offeror in connection with the Hutchison Scheme , and may therefore be deemed to be a "distribution participant" as defined in Rule 100 of Regulation M. As affiliates of HSBC t hat regularly pu rc hase secu rities for their own accounts and the accounts of others or recommend or exercise investment discretion w ith res pect to the purchase of securities , the Global Markets Div isions may be deemed to be "affiliated purchasers" of HSBC as defi ned in Rule 100 of Regulation M. 5 As such , the Market Activities wou ld be su bje ct to Rule 101 throug hout the Regulation M Restricted Period . Under Rule 101 , t he Global Markets Divisions wi ll not be permitted to bid for or purchase , or attempt to induce any person to bid for or purc hase , CKH Holdings Sha res or ADRs during the Regulation M Restricted Period unless one of the specified exceptions under Rule 10 1 is availabl e. Regulation M normally would not interfere with market making and other market activities in actively tra ded securities . However, the CKH Holdings Shares wi ll not be actively traded during the Regulation M Restricted Period for pu rposes of Regulation M because they will not have an ADTV (as defined by Regulation M) of at least U.S.$1 million for a period of two full calendar months. As the CK H Holdings Shares rep rese nt the successor shares to the Che ung Kong Shares, HSBC and HS BC Bank believe that the future trading volume and distribution by market for CKH Holdings Shares and ADRs can be expected to be in line with the historical t rading volume and distribu tion by market fo r Cheung Kong Shares and ADRs . Prior to their delisting , the Cheun g Kong Shares wo uld have easily satisfied the exception to th e provisions of Rul e 101 fo r actively traded securities . As a res ult, there would be no exce pti ons available under Rule 101 that wo uld permit the Global Markets Divisions to engage in the Market Activities. Without th e requested exemptive and/or no-action relief, the Global Markets Divisions would not be permitted to engage in the Ma rket Activities for an extended period of time. Th e secu riti es borrowing and lending activities co nducted by the Global Markets Divisions will not consti tute bids for, purchases of or inducements to make bids for or purchases of CKH Holdings Shares or ADRs in the traditional sense. Neverthe less , HSBC and HSBC Bank believe that in some circumstan ces the activities of th e Global Markets
Div isions may be deemed to be attempts to i nduce a bid or purc hase beca use a customer may purchase CKH Holdings Shares or ADRs from a third party in anticipation of lending them to a Global Markets Division , or a customer may arrange for a third party to purchase CKH Holdings Shares or ADRs after the customer has borrowed them f rom a Global Markets Division . HSBC and HSBC Bank therefore seek relief in order to cont inue to co nduct these activities , in addi tion to the derivative arbitrage and hedging activities described above , during the Regulation M Restricted Period . HSBC and HS BC Bank believe that the continuation of the Market Activities w ill not have a s ignificant effect on the ma rket price of the CKH Holdings Shares and ADRs. In addition , these ord inary cou rse activities are important aspects of the HSBC Group's business as a major finan cial institution in Hong Kong and the United Kingdom and , therefore, interrupting these activities for a period co uld have an adverse impact on the HSBC Group's business , incl uding its abi lity to manage properly its and its clients' risks. s The Global Markets Divis ions would otherwise qualify for the exception to the definition of "affiliated purchaser" se t forth in paragraphs (3}(i) -(i ii) thereof. but insofar as the y engage in prin cipal tradin g in CKH Hold ings Shares and ADRs fo r the pu rpose of the Mark et Act ivities, the exception will not be avai lable to the Global Markets Div isions. A193 50061 Page 8 of 12

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4.3 The Hong Kong Regu latory Market
4.3.1 Overview
Financ ial marke ts in securities in Hong Kong are primarily regulated under the SFO , as enforced by the SFC . Persons who carry on business in Hong Kong in activities regulated under the S FO , wh ich include acting as a broker-dealer, investment advisor or discretionary asset manager, are requ ired to be licensed by the SFC . Banking entities licensed by the Hong Kong Monetary Authority are also permitted to engage in S FO-regulated activities , provided they have registered with the SFC and have met all appl icable requirements . 4 .3.2 Market misconduct offenses Parts XI II and XIV of the SFO prohibit various forms of market misconduct. Violations can resul t in civi l proceedings before the Market Misconduct Tribunal under Part XIII of the SFO , which may result in the imposition of sanctions , such as disgorgement of profits and exclusion from participating in the securities and futures markets . Violations can also resu lt in criminal prosecution through the Hong Kong judicial system under Part X IV of the SFO , which may result in imprisonment fo r up to ten years. Prohibited forms of market misconduct incl ude market manipu lation . Specifically, Parts XIII and XIV of the SFO prohibit conduct tha t is intentionally or reckless ly manipulative of the price or tradi ng volu me of listed securities . 6 Th is wou ld incl ude the fo llowing :

• carrying out artificial transactio ns or devices that maintain, increase, reduce , stabilize or
  cause fluctuations in the price of securities;
• engaging in any activity that is likely to have the effect of creating a false or misleading
  appearance of active trading on a market or creating or mainta ining an artificial price; and
• disclosing fa lse or misleadi ng information that is likely to ind uce securi ties transactions or
  otherwise affect the price of securities .
  Certain types of transactions , such as sa les and purchases of securities that do not invo lve a chan ge of beneficial ownership, are prima facie regarded as market miscondu ct unless the person engaged in the conduct can establish that there was a legit imate purpose for the transaction that did not involve the creation of a false market for the relevant securities. 4 .3. 3 SFC s upervisory au thority over regulated firm s T he SFC has issued a "Code of Con duct" and oth er guidelines app lic able to licensed firms under which they have , among other things , a general obligation to act honestly, fairly and in the best interests of clients and the integ rity of the market and to otherwise comport themselves in a "fit and proper" manner. Failure to uphold these standards of conduct, even in the absence of a violation of statu tory law, could result in the SFC's imposing discipli nary sanctions , including licensing restrictions and monetary penalties , against t he cu lpable firm or licensed individuals. For example, a licensed firm that fa ils to implement proper systems and controls to prevent market misconduct by its employees cou ld be subject to discipline by the SFC , even if actual market misconduct was not proven to have taken place. The relevant offenses are false trading , price rigging , stock market manipulation. disclosu re of information about prohibited transactions and disclosure of false or misleading information inducing transactions. SFO sec. 274-278, 295-299. A19350061 Page 9 of 12 6

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4.3.4 Takeovers Code
In addition to the market misconduct prohibitions , the Takeovers Code imposes various restrictions on dealings by parties involved in an offer for a Hong Kong-listed company, as well as persons deemed to be "acting in concert " with them . These restrictions include the following :

• a prohibition on all dealings whatsoever in securities of the target by any person (other
  than the offeror) who is privy to confidential price-sensitive Information concerning the transaction between the time when there is reason to suppose that an approach or an offer or revision is contemplated and the announcement of the approach , the offer, the revision or of the termination of the discussions;
• a prohibition on dealings in the securities of the offeror except where the transaction
  (whether actual, contemplated or whose terms are being or have been revised) is not price-sensitive in relation to such securities;
• a prohibition during an offer period on the offeror and persons acting in concert with it from
  selling any securities in the target except with the prior consent of the SFC and following 24 hours' public notice that such sales might be made ; and
• a prohibition during the offer period on the offeror and persons acting in concert with it
  from dealing in any securities in the offeror or conducting any on-market buy-back of such securities . In addition , persons subject to the Takeovers Code must comply with reporting requirements in respect of any dealings that are not prohibited . The defin ition of ''acting in concert" includes both the financial advisor to an offeror as well as any persons co ntrolling , controlled by or under the same control as the advisor. Therefore, as a practical matter, the dealing restrictions and other requirements under the Takeovers Code will apply to the financial advisor's group as a whole. Upon application to the SFC , such persons may be able to obtain "exempt fund manager" ("EFM ") or EPT status that will allow them to continue to engage in certain dealing activities outside the Takeovers Code restrictions . An EFM is a person who manages investment accounts on a discretionary basis , and the exempt status applies to all discretionary dealings in client funds managed by the EFM . EPT status is restricted to trading activities conducted by the EPT trading as principal in securities for the purpose of derivative arbitrage or hedging activities such as closing out existing derivatives , delta hedging in respect of ex isting derivatives , index-related product or tracker fund arbitrage in relation to the relevant securities or similar activities assented to by the SFC during the offer period . Both EFMs and EPTs are subject to certain ongoing disclosure requirements during the offer period , as set out in Rule 22 of the Takeovers Code. An y permitted trading activities conducted by an EFM are required to be privatel y disclosed to the SFC . Any permitted trading activities conducted by an EPT are required to be publ icly disclosed on the websites of the Stock Exchange of Hong Kong and the SFC (or, in the case of agency trades on behalf of a non-discretionary client, privately disclosed to the SFC ). Subject to limited exceptions , all such disclosures must be made by no later than 10:00 a.m. (Hong Kong time) on the day after the dealing occurs. Further, in order to maintain their exempt status, EFMs and EPTs must provide the SFC w ith annual confirmations that, among other th ings , Information Barriers remain in place. On December 2, 2014, the SFC granted the Global Markets Divisions EPT status in the Exemptive Letter, whi ch permits them, among other things , to trade as principal in securities for the purpose of derivative arbitrage or hedging activities such as closing out existing derivatives , delta hedging in respect of existing derivatives , index-related produ ct or tracker fund arbitrage in relation to the relevant securities or other similar activities (which would otherwise have been restricted by the Takeovers Code), subject to A19350061 Page10of12

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maintenance of the Information Barriers and the public and private disclosure obligations described above. The SFC also noted in the Exemptive Letter that securi ties borrowing and lend ing transactions (includ ing the unwinding of such transactions) carried out by the Global Markets Divisions in the ord inar y course of their businesses wou ld not be subject to restri ction under the Takeovers Code . 5 Conditions and Relief In consideration of the foregoi ng, we respectfully request that the Staff grant exemptive rel ie f from , or confirm that t he Staff will not recommend t hat the SEC take enforcement action under, Rul e 101 of Regulation M in connection with the Market Activ ities during the Reg ulation M Rest ricted Period . The Globa l Markets Divisions wo uld conduct these activities in the ordinary course of their respecti ve businesses in accordance with applicable law in Hong Kong and England . 7 As a cond ition to the rel ief being requested , HSBC and HSBC Bank would undertake to inc lude disclosu re in the scheme document that will be distributed to Hutchison shareholders and the circula r that wi ll be distributed to CKH Holdings shareholders in connection with the Hutchison Scheme. The disclosure would be substantia lly s imilar to the fo llowing:
" During the distribu tion of CKH Holdings Shares in the Hutchison Scheme, certain divisions of HSBC and HSBC Bank that have been granted "exempt principal trader" status under the Takeovers Code intend to engage in various dealin g and brokerage activities involving CK H Holdings Sha res and ADRs when and to the extent permitted by appl icable laws and regulations , includi ng the Takeovers Code. In particular, these divisions of HSBC and HSBC Bank intend (1) to engage in trades in CKH Holdings Shares and ADRs fo r the ir own account and the accounts of their custome rs for the purpose of derivative arb itrage or hedging activities, such as closing out existi ng deri vatives , de lta hedging in respect of existing derivatives , index-related product or tracker fund arb it rage or simila r activities assented to by the SFC ; and (2) to engage in borrowing and lending transactions in CKH Holdings Shares and ADRs (including the unwinding of such transactio ns). Th ese divisions of HSBC and HSBC Bank wi ll not be oblige d to purchase CKH Holdings Shares or ADRs and any such purchases may be discontinued at any time in their sole discretion w ithout not ice. These activities cou ld have the effect of preven ting or delaying a decline in the ma rket price of CKH Holdings Shares or ADRs . Any ADR programs relati ng to CKH Holdings Shares w ill be unsponsored and establ ished by depositary banks without the participation or consent of CKH Holdings , and none of CKH Holdings , HSBC or HSBC Bank makes any representation in respect of the establishment or ma intenance of any A DR programs relating to CKH Holdings Shares." As a f urther condition to the relief being requested , the Global Markets Divisions will undertake to keep reco rds (the "Records") of the date and time at whi ch CKH Holding s Shares and ADRs re presenting CKH Holdings Shares are purchased or so ld, the market in which the purchase or sa le is effected, the amount of CKH Holdings Shares and ADRs purchased or sold and the pri ce of the purchase or sale, for each purchase or sale of CKH Holdings Shares and ADRs that the Globa l Ma rkets Divisions make as part of the ir Market Activities during the Regulation M Restricted Period (this information will not include an y 7 In connection with t he rel ief requested by HSBC and HSBC Bank in this lette r. please note tha t the Staff has previously granted substantiall y similar exe mpti ve and/or no-action relief from Regulation M . See , e.g., the exemp tive letters to Lloyds B anki ng Group pi c dated October 21, 2008, April 20 , 2009, November 2 , 2009, Septem ber 16, 2013, March 6 , 2014 and Ma rch 25, 201 4 ; the exem ptive letters to Ba rclay s PLC dated Aug ust 7, 2007, June 16, 2008, July 31, 2013, Novem ber 7 , 2013 and May 14. 2014; and the exe mptive letter to UBS AG da ted October 7, 20 14 . A19350061 Page 11 of 12

Linklaters client-specific data , the disclosure of w hich is restricted under local law) . The Global Markets Divis ions w ill maintain the Records for a period of two years following the end of the Regulation M Restricted Period . Upon the written req uest of the Director of the Division of Trading and Markets, HSBC and HSBC Bank wi ll make the Records available at the SEC's offi ces in Washington , D.C .

• • • • ....
        If you have a ny questions or requ ire any additional information , please do not hesitate to contact Pame la Shores in Hong Kong at 0 11 852 2901 5159 or Christian Felton in Hong Kong at 01 1 852 2901 5153. We may also be reached by email at pam .shores@li nklaters.com or ch ristian.felton@linklaters.com . We appreciate your assistance in this matter. Yours sincerely, Pamela Shores Linklaters cc : Joan M. Collopy Elizabeth Sandoe John Guidroz (Securities and Exchange Commission) Paul Hedley (The Hongkong and Shanghai Banking Corporation Limited) Paul J. Watson

(HSBC Bank pic)

David Sirignano
Amy Kroll
(Morgan, Lewis & Bockius LLP)
A19350061 Page 12 of 12