14. (1) Subject to subsection (2), every futures commission merchant shall maintain a minimum free capital that is the maximum amount, if any, that is deductible under any clause of the insurance policies required under section 20, plus the greater of, (a) $75,000 in net free capital; or (b) the sum of, (i) 10 per cent of the first $2,500,000 of adjusted liabilities, plus 8 per cent of the next $2,500,000 of adjusted liabilities, plus 7 per cent of the next $2,500,000 of adjusted liabilities, plus 6 per cent of the next $2,500,000 of adjusted liabilities, plus 5 per cent of adjusted liabilities in excess of $10,000,000, and (ii) the greater of, (A) up to the first $20,000,000 in market value of commodity futures contracts the sum of, 1. 2
per cent of the market value for contracts, other than for securities, representing a long position or the total number of commodity futures contracts, other than for securities, representing a short position in each commodity, whichever is the greater, carried for all customers’ and firm accounts excluding exempted contracts and contracts entered into to effect a dealer’s covering transaction, and 2. the amount arrived at by the application of the securities futures capital charge, to a maximum of $100,000, or (B) the sum of, 1. ½ of 1 per cent of the market value of the total number of commodity futures contracts, other than for securities, representing a long position or the total number of commodity futures contracts, other than for securities, representing a short position in each commodity, whichever is the greater, carried for all customers’ and firm accounts excluding exempted contracts and contracts entered into to effect a dealer’s covering transaction, and 2. the amount arrived at by the application of the securities futures capital charge, but the amount arrived at under subclauses (i) and (ii) shall be increased by the aggregate of all amounts arrived at by application of the customer concentration factor and of the commodity concentration factor, where, (iii) the customer concentration factor is derived by calculating for each customer or group of related customers and for firm accounts the maximum aggregate price movement if the market value of all commodity futures contracts, excluding exempted contracts, held at the relevant time for that customer or group of related customers or for firm accounts were to change by the standard daily limit moves applicable to such contracts respectively, and if, for any customer or group of related customers or for firm accounts, the amount so calculated, less any funds provided in excess of margin requirements, exceeds an amount equal to 15 per cent of the liquid capital of the dealer, then the excess shall be included in the determination of the customer concentration factor, and (iv) the commodity concentration factor is derived as to each commodity underlying commodity futures contracts held by the dealer, whether for customer or for firm account, by multiplying x by y, where, (A) x is the number of commodity futures contracts equalling the greater of the long or the short position of commodity futures contracts in that commodity so held by the dealer at the relevant time, and (B) y is the price movement resulting when such a commodity futures contract changes in market value by two standard daily limit moves, and, where the amount so determined as to commodity futures contracts in any particular commodity, other than exempted contracts, and after deducting funds provided in excess of margin requirements as calculated under subsection (6) is, for five consecutive trading days, in excess of an amount equal to 40 per cent of the liquid capital of the dealer, then an amount equal to the excess as at the close of business on the fifth of such consecutive trading days shall be included in the determination of the commodity concentration factor.  R.R.O. 1990, Reg. 90, s. 14 (1). (2) A futures commission merchant is not required to maintain the amount calculated in accordance with clause (1) (b) with respect to those contracts resulting from trades executed on the instructions of another registered futures commission merchant.  O. Reg. 321/98, s. 6. (3) Revoked:  O. Reg. 321/98, s. 6. (4) Every adviser shall maintain a minimum free capital of the maximum amount, if any, that is deductible under any clause of the insurance policies required under section 20, plus $5,000 in working capital or such greater amount as the Director considers necessary where the adviser exercises control over clients’ money, securities or property.  R.R.O. 1990, Reg. 90, s. 14 (4). (5) Subsection (4) does not apply to a commodity trading adviser who advises others through publications or writings and who, (a) provides no advice as to trading in contracts that is designed or purports to be designed to accord with the financial objectives of specific clients; and (b) does not exercise control over clients’ money, securities or property.  R.R.O. 1990, Reg. 90, s. 14 (5). (6) For the purpose of subclause (1) (b) (iv) the determination of funds provided in excess of margin requirements shall be the aggregate of amounts determined with respect to each account in which commodity futures contracts for the particular commodity are held on a short or long basis, whichever is relevant for purposes of the calculation of the commodity concentration factor, with the amount to be included for each such account being the lesser of, (a) the funds provided in excess of margin requirements held in that account at the relevant time; or (b) the amount by which the price of the net long or short position of futures contracts for the relevant commodity held in that account would change as a consequence of two standard daily limit moves.  R.R.O. 1990, Reg. 90, s. 14 (6). (7) For the purpose of this section, “exempted contract” means, (a) spreads in the same commodity and entered into on the same commodity futures exchange, (b) short hedge positions where a warehouse receipt or other evidence of title for a like quantity of the commodity to be delivered under the contract is held by the dealer, and (c) commodity futures contracts held for financial institutions; “securities futures capital charge” means that amount representing 10 per cent of the margin requirement for the total number of commodity futures contracts for securities representing a long position or the total number of commodity futures contracts for securities representing a short position in each security, whichever is the greater, carried for all customers’ and firm accounts excluding exempted contracts and contracts entered into to effect a dealer’s covering transaction.  R.R.O. 1990, Reg. 90, s. 14 (7). (8) Despite this section, every registrant who is also a registrant under the Securities Act shall maintain the minimum free capital required of the registrant under the regulations under that Act.  R.R.O. 1990, Reg. 90, s. 14 (8). conditions of registration — reports