HSBC, “the world’s local bank” has its annual report at [http://www.hsbcnet.com/gbm/rich_media/hsbc-com/annual-report-2012/index.html] is only 544 pages.

Trading has had a lot of negative publicity post the global financial crash. This is where bank’s use their own money to work the money markets and take positions (risks) on the price of commodities, currencies, shares, bonds, other financial instruments. etc etc. This is known as Proprietary Trading. The reason for this “prop trading” to be seen as controversial is, that is the bank gets into trouble and makes huge losses on bad risk decisions, the tax payer is on the hook to bail out the bank.

Page 374 onwards is the Balance Sheet of HSBC and what is interesting to see, is the trading exposure of the bank.

Trading assets of £408,811 million = £408 Billion
Trading liabilities of £304,563 million = £304 Billion

These assets are broken down on page 436.

They are the assets the bank trades with each day, of which Debt securities made up £144,677 million (£144 Billion), these are fixed income instruments.

Good to know, that the bank has a very strong position with more trading assets than liabilities, thus it is able to meet all liabilities.