Regulatory Requirements

As registered broker-dealers, Cowen and Company, Cowen Execution, ATM Execution, Cowen Prime and Westminster Research are subject to the SEC's Uniform Net Capital Rule 15c3-1 (the “Rule”), which requires the maintenance of minimum net capital. Each registered broker-dealer has elected to compute net capital under the alternative method permitted by the Rule. Under the alternative method Cowen and Company's minimum net capital requirement, as defined in (a)(4) of the Rule, is $1.0 million. Cowen Execution, ATM Execution, Cowen Prime and Westminster Research are required to maintain minimum net capital, as defined in (a)(1)(ii) of the Rule, equal to the greater of $250,000 or 2% of aggregate debits arising from customer transactions. Advances to affiliates, repayment of borrowings, distributions, dividend payments and other equity withdrawals are subject to certain notification and other requirements of the Rule and other regulatory bodies.

Cowen Execution is also subject to CFTC Regulation 1.17 (“Regulation 1.17”) and Options Clearing Corporation (“OCC”) Rule 302. Regulation 1.17 requires Cowen Execution to maintain net capital equal to or in excess of $45,000 or the amount of net capital required by Rule 15c3-1, whichever is greater. OCC Rule 302 requires maintenance of net capital equal to the greater of $2,000,000 or 2% of aggregate debit items. At September 30, 2017, the Company had $102.9 million of net capital in excess of this minimum requirement.

Ramius UK, CIL and Cowen Execution Services Ltd are subject to the capital requirements of the Financial Conduct Authority (“FCA”) of the UK. Financial Resources, as defined, must exceed the requirement of the FCA.

Cowen’s Luxembourg reinsurance companies, Vianden RCG Re SCA (“Vianden”) and Hollenfels, are required to maintain a solvency capital ratio as calculated by relevant European Commission directives and local regulatory rules in Luxembourg. Each company’s solvency capital ratio as of September 30, 2017 was in excess of this minimum requirement.

Based on minimum capital and surplus requirements pursuant to the laws of the state of New York that apply to captive insurance companies, RCG Insurance Company, Cowen’s captive insurance company incorporated and licensed in the state of New York, was required to maintain capital and surplus of approximately $0.3 million as of September 30, 2017. RCG Insurance Company’s capital and surplus as of September 30, 2017 totaled approximately $24.6 million.

As of September 30, 2017, these regulated broker-dealers had regulatory net capital or financial resources, regulatory net capital requirements or minimum FCA requirement and excess as follows:



Subsidiary	Net Capital		Minimum Net Capital Requirement		Excess Net Capital
	(dollars in millions)
Cowen and Company	$	83.4	$	1.0	$	82.4
Cowen Execution	$	104.9	$	1.4	$	103.5
ATM Execution	$	2.0	$	0.3	$	1.7
Cowen Prime	$	10.9	$	0.3	$	10.6
Westminster Research	$	12.0	$	0.3	$	11.7
Ramius UK	$	0.2	$	0.1	$	0.1
Cowen International Limited	$	11.4	$	6.0	$	5.4
Cowen Execution Services Ltd	$	3.9	$	2.0	$	1.9

Cowen and Company, ATM Execution and Cowen Prime claim exemption from SEC Rule 15c3-3 (“Rule 15c3-3”) subparagraph (k)(2)(ii) of the Securities Exchange Act of 1934 since it clears its securities transactions on a fully disclosed basis and promptly transmits all customer funds and securities to the clearing broker-dealer that carries the accounts. Westminster Research claims exemption from Rule 15c3-3 subparagraph (k)(2)(i) of the Securities Exchange Act of 1934 since it conducts all financial transactions with its customers through a bank account designated as Special Account for the Exclusive Benefit of Customers.

In accordance with the requirements of Rule 15c3-3, Cowen Execution may be required to deposit in a Special Reserve Account, cash or acceptable qualified securities for the exclusive benefit of customers. As of September 30, 2017, Cowen Execution had segregated approximately $21.7 million of cash, while its required deposit was $13.4 million.

As a clearing broker-dealer, Cowen Execution is required to compute a reserve requirement for proprietary accounts of broker-dealers (“PAB”), as defined in Rule 15c3-3. PAB calculation is completed to allow each correspondent firm that uses Cowen Execution as its clearing broker-dealer to classify its assets held by Cowen Execution as allowable assets in the correspondent's net capital calculation. At September 30, 2017, Cowen Execution had $18.4 million of cash on deposit in special reserve bank accounts for PAB, which was in excess of its required deposit of $35 million.

PAB held at external clearing brokers are considered allowable assets for net capital purposes, pursuant to agreements between Cowen and Company, ATM Execution, Cowen Prime, and their clearing brokers, which require, among other things, that those clearing brokers perform computations for PAB and segregate certain balances on behalf of Cowen and Company, ATM Execution and Cowen Prime, if applicable.