In the normal course of business, we conduct transactions with HSBC and its subsidiaries. HSBC policy requires that these transactions occur at prevailing market rates and terms and, where applicable, these transactions are compliant with United States banking regulations. All extensions of credit by (and certain credit exposures of) HSBC Bank USA to other HSBC affiliates (other than FDIC insured banks) are legally required to be secured by eligible collateral. The following tables and discussions below present the more significant related party balances and the income (expense) generated by related party transactions:


At December 31,	2020		2019
	(in millions)
Assets:
Cash and due from banks	$	516	$	850
Interest bearing deposits with banks	187		40
Securities purchased under agreements to resell(1)	3,941		4,600
Trading assets	314		79
Loans	1,100		2,343
Other(2)	319		456
Total assets	$	6,377	$	8,368
Liabilities:
Deposits	$	15,163	$	9,000
Trading liabilities(3)	2,375		293
Short-term borrowings	270		1,166
Long-term debt	2,878		7,848
Other(2)	268		931
Total liabilities	$	20,954	$	19,238



Year Ended December 31,	2020		2019		2018
	(in millions)
Income (Expense):
Interest income	$	55	$	168	$	107
Interest expense	(354)		(538)		(367)
Net interest expense	(299)		(370)		(260)
Trading revenue (expense)	(93)		(2,669)		1,370
Servicing and other fees from HSBC affiliates:
HSBC Bank plc	186		171		176
HSBC Markets (USA) Inc. ("HMUS")	107		111		112

Other HSBC affiliates	54		72		68
Total servicing and other fees from HSBC affiliates	347		354		356
Gain (loss) on instruments designated at fair value and related derivatives	699		1,986		(1,052)
Support services from HSBC affiliates:
HTSU	(1,066)		(1,153)		(1,198)
HMUS	(89)		(100)		(105)
Other HSBC affiliates	(396)		(385)		(300)
Total support services from HSBC affiliates	(1,551)		(1,638)		(1,603)
Rental income from HSBC affiliates, net(1)	44		55		48
Stock based compensation expense(2)	(22)		(25)		(25)

(1)We receive rental income from our affiliates, and in some cases pay rental expense to our affiliates, for rent on certain office space. Net rental income from our affiliates is recorded as a component of occupancy expense, net in our consolidated statement of income (loss).

(2)Employees may participate in one or more stock compensation plans sponsored by HSBC. These expenses are included in salaries and employee benefits in our consolidated statement of income (loss). Certain employees are also eligible to participate in a defined benefit pension plan and other postretirement plans sponsored by HSBC North America which are discussed in Note 21, "Pension and Other Postretirement Benefits."

We use HSBC affiliates to fund a portion of our borrowing and liquidity needs. At December 31, 2020 and 2019, long-term debt with affiliates reflected $2.9 billion and $7.8 billion, respectively, of borrowings from HSBC North America. During 2020, $5.0 billion of these borrowings were recharacterized as time deposits, including $1.5 billion of fixed-rate senior debt which matures in March 2021, $2.0 billion of fixed-rate senior debt which matures in May 2021 and $1.5 billion of fixed-rate senior debt which matures in March 2026. The remaining outstanding balances include $0.9 billion of floating-rate subordinated debt which matures in May 2025 and $2.0 billion of fixed-rate senior debt which matures in September 2025.

At December 31, 2019, we had a $150 million uncommitted line of credit with HSBC North America. During 2020, this credit facility was terminated and replaced by a $4.0 billion uncommitted line of credit with HSBC North America. The available borrowing capacity under this new facility is fungible between HSBC USA, HSBC Securities (USA) Inc. ("HSI") and HSBC North America, but total borrowings cannot collectively exceed $4.0 billion at any time. There was no outstanding balance under these credit facilities at either December 31, 2020 or 2019.

We have also incurred short-term borrowings with certain affiliates, largely securities sold under repurchase agreements with HSI. In addition, certain affiliates have also placed deposits with us.

HMUS and subsidiaries We have extended loans and lines of credit, some of them uncommitted, to HMUS and its subsidiaries in the amount of $12.0 billion at both December 31, 2020 and 2019, of which $1.1 billion and $2.3 billion, respectively, was

Other short-term affiliate lending In addition to loans and lines extended to affiliates discussed above, from time to time we may extend loans to affiliates which are generally short term in nature. At December 31, 2020 and 2019, there were $12 million and $47 million, respectively, of these loans outstanding.

Derivative contracts As part of a global HSBC strategy to offset interest rate or other market risks associated with certain securities, debt issues and derivative contracts with unaffiliated third parties, we routinely enter into derivative transactions with HSBC Bank plc and other HSBC affiliates. The notional value of derivative contracts related to these transactions was approximately $923.6 billion and $1,111.5 billion at December 31, 2020 and 2019, respectively. The net credit exposure (defined as the net fair value of derivative assets and liabilities, including any collateral received) related to the contracts was approximately $66 million and $90 million at December 31, 2020 and 2019, respectively. Our Global Banking and Markets business accounts for these transactions on a mark to market basis, with the change in value of contracts with HSBC affiliates substantially offset by the change in value of related contracts entered into with unaffiliated third parties.

•HSBC North America's technology and support services, including risk management, compliance, operations, finance, tax, legal, human resources, corporate affairs and other shared services, are centralized within HTSU. HTSU also provides certain item processing and statement processing activities to us. The fees we pay HTSU for the centralized support services and processing activities are included in support services from HSBC affiliates. We also receive fees from HTSU for providing certain administrative services to them. The fees we receive from HTSU are included in servicing and other fees from HSBC affiliates. In certain cases, for facilities used by HTSU, we may guarantee their performance under the lease agreements.

•We use other subsidiaries of HSBC, including HSBC Global Services Limited an HSBC subsidiary located outside of the United States, to provide various support services to our operations, including among other areas, information technology, software development, customer service, collection, risk management and accounting. The expenses related to these services are included in support services from HSBC affiliates.

•We utilize HSI, a subsidiary of HMUS, for broker dealer, debt underwriting, customer referrals, loan syndication and other treasury and traded markets related services, pursuant to service level agreements. Debt underwriting fees charged by HSI are deferred as a reduction of long-term debt and amortized to interest expense over the life of the related debt. Fees charged by HSI for the other services are included in support services from HSBC affiliates. We also receive fees from HSI for providing certain wealth management services to them. The fees we receive from HSI are included in servicing and other fees from HSBC affiliates.

•We receive fees from other subsidiaries of HSBC, including HSBC Bank plc, for providing them with banking and other miscellaneous services as well as support for certain administrative and global business activities. These fees are reported in servicing and other fees from HSBC affiliates.

During 2019, we paid a distribution on our common stock of $2.4 billion from surplus capital to HSBC North America. See Note 25, "Retained Earnings and Regulatory Capital Requirements," for additional details.