Company: HBCYF
Filing Date: 2025-02-20
Form Type: 20-F
Source: 0001089113-25-000040
Chunk: 250

Company: HSBC HOLDINGS PLC
Filing Date: 2025-02-20
Form: 20-F
Chunk 250
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 relating to climate change, transition plans, greenwashing and supply chain due diligence;

| 160 | HSBC Holdings plcAnnual Report on Form 20-F |

Risk review

– the increasing regulatory expectations and requirements (for example, under the EU ‘ s Digital Operational Resilience Act) relating to various aspects of operational and cyber resilience, including an ongoing focus on the response of institutions to operational disruptions; and – the regulatory focus on policies and controls related to the unauthorised use by employees of electronic communications on non-business platforms. We may not manage risks associated with the replacement of benchmark rates and indices effectively Ibors were previously used extensively to set interest rates on different types of financial transactions and for valuation purposes, risk measurement and performance benchmarking. Key benchmark rates and indices, including Ibors such as the London interbank offered rate (‘Libor’), have been the subject of both national and international regulatory scrutiny and reform for many years. This resulted in significant changes to the methodology and operation of certain benchmarks and indices, the adoption of replacement near risk free rates (‘RFRs‘) and the proposed discontinuation of certain reference rates (including Libor). From the end of December 2021, the European Money Markets Institute ceased publication of the Euro Overnight Index average and from 30 September 2024 ICE Benchmark Administration Limited ceased publication of all thirty-five Libor settings, and RFRs have been adopted in their place. The continued existence of a small number of legacy contracts in benchmark rates that have demised (so called ‘tough legacy contracts‘) results in risks for HSBC, its clients and, investors, and the financial services industry more widely. These include but are not limited to: – Regulatory compliance, legal and conduct risks, which arise from the continued transition of legacy contracts to RFRs or alternative rates and from the sales of products referencing RFRs. These risks could be heightened if HSBC’s sales processes and procedures do not appropriately detail the risks and complexity of RFR market conventions; – Legal risks associated with legacy contracts that HSBC is unable to transition, including those contracts that rely on the use of legislative solutions. If HSBC is unable to transition legacy contracts, this could lead to reliance on fallback provisions which do not contemplate the permanent cessation of the relevant Ibor, and there is a risk that these fallback provisions will not work from a contractual, practical or financial perspective. While legislative solutions have in some circumstances assisted market participants, our clients and our investors with transitioning legacy contracts and mitigating risks