HSBC 2012 Annual Report Download - page 439

437
Overview
Operating & Financial Review
Corporate Governance
Financial Statements
Shareholder Information
Loans and advances to customers held for trading
2012 2011
US$m US$m
Reverse repos ......................................................................................................................................... 73,666 34,358
Settlement accounts ............................................................................................................................... 8,186 5,804
Stock borrowing .................................................................................................................................... 10,710 3,928
Other ...................................................................................................................................................... 25,385 25,038
117,947 69,128
15 Fair values of financial instruments carried at fair value
The classification of financial instruments is determined in accordance with the accounting policies set out in Note 2.
The use of assumptions and estimation in valuing financial instruments is described on page 56.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing
parties in an arm’s length transaction.
Financial instruments carried at fair value and bases of valuation1
Valuation techniques
Quoted
market
price
Level 1
Using
observable
inputs
Level 2
With
significant
unobservable
inputs
Level 3 Total
US$m US$m US$m US$m
At 31 December 2012
Assets
Trading assets ........................................................................ 198,843 205,590 4,378 408,811
Financial assets designated at fair value ............................... 25,575 7,594 413 33,582
Derivatives ............................................................................. 1,431 352,960 3,059 357,450
Financial investments: available for sale .............................. 253,246 135,931 8,511 397,688
Liabilities
Trading liabilities .................................................................. 116,550 180,543 7,470 304,563
Financial liabilities designated at fair value .......................... 10,703 77,017 – 87,720
Derivatives ............................................................................. 1,506 354,375 3,005 358,886
At 31 December 2011
Assets
Trading assets ........................................................................ 180,043 145,628 4,780 330,451
Financial assets designated at fair value ............................... 22,496 7,644 716 30,856
Derivatives ............................................................................. 1,262 340,668 4,449 346,379
Financial investments: available for sale .............................. 217,788 151,936 9,121 378,845
Liabilities
Trading liabilities .................................................................. 98,208 159,157 7,827 265,192
Financial liabilities designated at fair value .......................... 27,461 57,696 567 85,724
Derivatives ............................................................................. 1,991 340,260 3,129 345,380
1 The above table does not include financial instruments within the Assets held for sale and Liabilities of disposal groups held for sale
categorisations.
The increase in Level 1 trading assets and liabilities reflects an increase in equity securities and settlement account
balances, the latter varying considerably in proportion with the level of trading activity. The increase in Level 2
assets reflects higher reverse repo balances used to cover short positions and an increase in repo balances contributed
to the growth in Level 2 liabilities.
As described on page 446, HSBC Holdings transferred financial liabilities designated at fair value from Level 1 to
Level 2. There were no other material transfers between Level 1 and Level 2 in the year. An analysis of the
movements of Level 3 financial instruments is provided on page 447.