Regulatory Requirements

6 Months Ended

Jun. 30, 2020

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 Securities Exchange Act of 1934. 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. As of June 30, 2020, the net capital of Oppenheimer as calculated under the Rule was $251.3 million or 21.83% of Oppenheimer's aggregate debit items. This was $228.3 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. As of June 30, 2020, Freedom had net capital of $5.0 million, which was $4.9 million in excess of the $100,000 required to be maintained at that date.

As of June 30, 2020, the capital required and held under the Capital Requirements Directive ("CRD IV") for Oppenheimer Europe Ltd. was as follows:


•	Common Equity Tier 1 ratio 23.36% (required 4.5%);


•	Tier 1 Capital ratio 23.36% (required 6.0%); and


•	Total Capital ratio 31.15% (required 8.0%).

In December 2017, Oppenheimer Europe Ltd. received approval from the Financial Conduct Authority ("FCA") for a variation of permission to remove the limitation of "matched principal business" from the firm's scope of permitted businesses and become a "Full-Scope Prudential Sourcebook for Investment Firms (IFPRU) €730K" firm which was effective January 2018. In addition to the capital requirement under CRD IV above, Oppenheimer Europe Ltd. is required to maintain a minimum capital of EUR 730,000. As of June 30, 2020, Oppenheimer Europe Ltd. was in compliance with its regulatory requirements.

As of June 30, 2020, the regulatory capital of Oppenheimer Investments Asia Limited was $3.1 million, which was $2.7 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 of Hong Kong. As of June 30, 2020, Oppenheimer Investment Asia Limited was in compliance with its regulatory requirements.