Regulatory requirements

The Company’s U.S. broker dealer subsidiaries, Oppenheimer and Freedom, are subject to the uniform net capital requirements of the SEC under Rule 15c3-1 (the "Rule") promulgated under the Exchange Act. Oppenheimer computes its net capital requirements under the alternative method provided for in the Rule which requires that Oppenheimer maintain net capital equal to two percent of aggregate customer-related debit items, as defined in SEC Rule 15c3-3. At March 31, 2016, the net capital of Oppenheimer as calculated under the Rule was $112.8 million or 9.61% of Oppenheimer’s aggregate debit items. This was $89.3 million in excess of the minimum required net capital at that date. Freedom computes its net capital requirement under the basic method provided for in the Rule, which requires that Freedom maintain net capital equal to the greater of $100,000 or 6-2/3% of aggregate indebtedness, as defined. At March 31, 2016, Freedom had net capital of $5.7 million, which was $5.6 million in excess of the $100,000 required to be maintained at that date.

New Basel III requirements being implemented in the European Union have changed how capital adequacy is reported under the Capital Requirements Directive (CRD IV), effective January 1, 2014, for Oppenheimer Europe Ltd. At March 31, 2016, the capital required and held under CRD IV was as follows:


•	Common Equity Tier 1 ratio 12.32% (required 4.5%);


•	Tier 1 Capital ratio 12.32% (required 6.0%); and


•	Total Capital ratio 13.75% (required 8.0%).

At March 31, 2016, the regulatory capital of Oppenheimer Investments Asia Limited was $2.2 million, which was $1.8 million in excess of the $387,000 required to be maintained on that date. Oppenheimer Investments Asia Limited computes its regulatory capital pursuant to the requirements of the Securities and Futures Commission in Hong Kong.