does not reduce the total risk maintenance orperformance bond requirement of the account that holds the long option position;
(iii) The risk margin for an account carried by a futures commission merchant whichis not a member of the exchange or the clearing organization that requires collectionof such margin should be calculated as if the futures commission merchant weresuch a member; and
(iv) If a futures commission merchant does not possess sufficient information todetermine what portion of an account’s total margin requirement represents riskmargin, all of the margin required by the exchange or the clearing organizationthat requires collection of such margin for that account, shall be treated as riskmargin.
(c) Definitions: For the purposes of this section:
(1) Net capital means the amount by which current assets exceed liabilities. Indetermining “net capital”:CFTC Minimum Finance Requirement 197
 
(i) Unrealized profits shall be added and unrealized losses shall be deducted in theaccounts of the applicant or registrant, including unrealized profits and losses onfixed price commitments and forward contracts;
(ii) All long and all short positions in commodity options which are traded on acontract market and listed security options shall be marked to their market valueand all long and all short securities and commodities positions shall be marked totheir market value;
(iii) The value attributed to any commodity option which is not traded on a contractmarket shall be the difference between the option’s strike price and the market valuefor the physical or futures contract which is the subject of the option. In the caseof a call commodity option which is not traded on a contract market, if the marketvalue for the physical or futures contract which is the subject of the option is lessthan the strike price of the option, it shall be given no value. In the case of a putcommodity option which is not traded on a contract market, if the market valuefor the physical or futures contract which is the subject of the option is more thanthe strike price of the option, it shall be given no value; and
(iv) The value attributed to any unlisted security option shall be the differencebetween the option’s exercise value or striking value and the market value of theunderlying security. In the case of an unlisted call, if the market value of theunderlying security is less than the exercise value or striking value of such call,it shall be given no value; and, in the case of an unlisted put, if the market valueof the underlying security is more than the exercise value or striking value of theunlisted put, it shall be given no value.
(2) The term current assets means cash and other assets or resources commonlyidentified as those which are reasonably expected to be realized in cash or soldduring the next 12 months. “Current assets” shall:
(i) Exclude any unsecured commodity futures or option account containing a ledgerbalance and open trades, the combination of which liquidates to a deficit or contain-ing a debit ledger balance only: Provided, however, Deficits or debit ledger balancesin unsecured customers’, non-customers’, and proprietary accounts, which are thesubject of calls for margin or other required deposits may be included in currentassets until the close of business on the business day following the date on whichsuch deficit or debit ledger balance originated providing that the account had timelysatisfied, through the deposit of new funds, the previous day’s debit or deficits, ifany, in its entirety.
(ii) Exclude all unsecured receivables, advances and loans except for:
(A) Receivables resulting from the marketing of inventories commonly associatedwith the business activities of the applicant or registrant and advances on fixed price
purchases commitments: Provided, Such receivables or advances are outstandingno longer than 3 calendar months from the date that they are accrued;198 Beat the Forex Dealer
(B) Interest receivable, floor brokerage receivable, commissions receivable fromother brokers or dealers (other than syndicate profits), mutual fund concessionsreceivable and management fees receivable from registered investment companiesand commodity pools: Provided, Such receivables are outstanding no longer thanthirty (30) days from the date they are due; and dividends receivable outstandingno longer than thirty (30) days from the payable date;
(C) Receivables from clearing organizations and securities clearing organizations;
(D) Receivables from registered futures commission merchants or brokers, resultingfrom commodity futures or option transactions, except those specifically excludedunder paragraph (c)(2)(i) of this section;
(E) Insurance claims which arise from a reportable segment of the applicant’s orregistrant’s overall business activities, as defined in generally accepted accountingprinciples, other than in the commodity futures, commodity option, security andsecurity option segments of the applicant’s or registrant’s business activities whichare not outstanding more than 3 calendar months after the date they are recordedas a receivable;
(F) All other insurance claims not subject to paragraph (c)(2)(ii)(E) of this section,which are not older than seven (7) business days from the date the loss givingrise to the claim is discovered; insurance claims which are not older than twenty(20) business days from the date the loss giving rise to the claim is discovered andwhich are covered by an option of outside counsel that the claim is valid and iscovered by insurance policies presently in effect; insurance claims which are olderthan twenty (20) business days from the date the loss giving rise to the claim isdiscovered and which are covered by an opinion of outside counsel that the claim isvalid and is covered by insurance policies presently in effect and which have beenacknowledged in writing by the insurance carrier as due and payable: Provided,Such claims are not outstanding longer than twenty (20) business days from thedate they are so acknowledged by the carrier;
(iii) Exclude all prepaid expenses and deferred charges;(iv) Exclude all inventories except for:
(A) Readily marketable spot commodities; or spot commodities which “adequatelycollateralize” indebtedness under paragraph (c)(7) of this section;
(B) Securities which are considered “readily marketable” (as defined in§240.15c3-—1(c)(11) of this title) or which “adequately collateralize” indebtednessunder paragraph (c)(7) of this section;
(C) Work in process and finished goods which result from the processing of com-modities at market value;
(D) Raw materials at market value which will be combined with spot commoditiesto produce a finished processed commodity; andCFTC Minimum Finance Requirement 199
 
(E) Inventories held for resale commonly associated with the business activities ofthe applicant or registrant;
(v) Include fixed assets and assets which otherwise would be considered noncurrentto the extent of any long-term debt adequately collateralized by assets acquired foruse in the ordinary course of the trade or business of an applicant or registrantand any other long-term debt adequately collateralized by assets of the applicantor registrant if the sole recourse of the creditor for nonpayment of such liabilityis to such asset: Provided, Such liabilities are not excluded from liabilities in thecomputation of net capital under paragraph (c)(4)(vi) of this section;
(vi) Exclude all assets doubtful of collection or realization less any reserves estab-lished therefore;
(vii) Include, in the case of future income tax benefits arising as a result of unre-alized losses, the amount of such benefits not exceeding the amount of incometax liabilities accrued on the books and records of the applicant or registrant, butonly to the extent such benefits could have been applied to reduce accrued taxliabilities on the date of the capital computation, had the related unrealized lossesbeen realized on that date;
(viii) Include guarantee deposits with clearing organizations and stock in clearingorganizations to the extent of its margin value;
(ix) In the case of an introducing broker or an applicant for registration as anintroducing broker, include 50 percent of the value of a guarantee or security depositwith a futures commission merchant which carries or intends to carry accounts forthe customers of the introducing broker; and
(x) Exclude exchange memberships.
(3) A loan or advance or any other form of receivable shall not be considered“secured” for the purposes of paragraph (c)(2) of this section unless the followingconditions exist:
(i) The receivable is secured by readily marketable collateral which is otherwiseunencumbered and which can be readily converted into cash: Provided, however,That the receivable will be considered secured only to the extent of the marketvalue of such collateral after application of the percentage deductions specified inparagraph (c)(5) of this section; and
(ii(A) The readily marketable collateral is in the possession or control of theapplicant or registrant; or
(B) The applicant or registrant has a legally enforceable, written security agree-ment, signed by the debtor, and has a perfected security interest in the readilymarketable collateral within the meaning of the laws of the State in which thereadily marketable collateral is located.200 Beat the Forex Dealer
 
(4) The term liabilities means the total money liabilities of an applicant or reg-istrant arising in connection with any transaction whatsoever, including economicobligations of an applicant or registrant that are recognized and measured in con-formity with generally accepted accounting principles. “Liabilities” also includecertain deferred credits that are not obligations but that are recognized and mea-sured in conformity with generally accepted accounting principles. For the purposesof computing “net capital,” the term “liabilities”:
(i) Excludes liabilities of an applicant or registrant which are subordinated to theclaims of all general creditors of the applicant or registrant pursuant to a satisfactorysubordination agreement, as defined in paragraph (h) of this section;
(ii) Excludes, in the case of a futures commission merchant, the amount of money,securities and property due to commodity futures or option customers which is heldin segregated accounts in compliance with the requirements of the Act and theseregulations: Provided, however, That such exclusion may be taken only if suchmoney, securities and property held in segregated accounts have been excludedfrom current assets in computing net capital;
(iii) Includes, in the case of an applicant or registrant who is a sole proprietor, theexcess of liabilities which have not been incurred in the course of business as afutures commission merchant or as an introducing broker over assets not used inthe business;
(iv) Excludes the lesser of any deferred income tax liability related to the itemsin paragraphs (c)(4)(i) (A), (B), and (C) below, or the sum of paragraphs (c)(4)(i)(A), (B), and (C) below:
(A) The aggregate amount resulting from applying to the amount of the deductionscomputed in accordance with paragraph (c)(5) of this section the appropriate Fed-eral and State tax rate(s) applicable to any unrealized gain on the asset on whichthe deduction was computed;
(B) Any deferred tax liability related to income accrued which is directly relatedto an asset otherwise deducted pursuant to this section;
(C) Any deferred tax liability related to unrealized appreciation in value of anyasset(s) which has been otherwise excluded from current assets in accordance withthe provisions of this section;
(v) Excludes any current tax liability related to income accrued which is directlyrelated to an asset otherwise deducted pursuant to this section; and
(vi) Excludes liabilities which would be classified as long term in accordance withgenerally accepted accounting principles to the extent of the net book value of plant,property and equipment which is used in the ordinary course of any trade or busi-ness of the applicant or registrant which is a reportable segment of the applicant’sor registrant’s overall business activities, as defined in generally accepted account-ing principles, other than in the commodity futures, commodity option, securityCFTC Minimum Finance Requirement 201
 
and security option segments of the applicant’s or registrant’s business activities:Provided, That such plant, property and equipment is not included in current assetspursuant to paragraph (c)(2)(v) of this section.
(5) The term adjusted net capital means net capital less:
(i) The amount by which any advances paid by the applicant or registrant on cashcommodity contracts and used in computing net capital exceeds 95 percent of themarket value of the commodities covered by such contracts;
(ii) In the case of all inventory, fixed price commitments and forward contracts,the applicable percentage of the net position specified below:
(A) Inventory which is currently registered as deliverable on a contract market andcovered by an open futures contract or by a commodity option on a physical—Nocharge.
(B) Inventory which is covered by an open futures contract or commodityoption.—5 percent of the market value.
(C) Inventory which is not covered.—20 percent of the market value.
(D) Inventory and forward contracts in those foreign currencies that are purchasedor sold for future delivery on or subject to the rules of a contract market, and whichare covered by an open futures contract.—No charge
(E) Inventory and forward contracts in euros, British pounds, Canadian dollars,Japanese yen, or Swiss francs, and which are not covered by an open futurescontract or commodity option.—6 percent of the market value.
(F) Fixed price commitments (open purchases and sales) and forward contractswhich are covered by an open futures contract or commodity option —10 percentof the market value.
(G) Fixed price commitments (open purchases and sales) and forward contractswhich are not covered by an open futures contract or commodity option.—20 per-cent of the market value.
(iii)-(iv) [Reserved]
(v) In the case of securities and obligations used by the applicant or registrantin computing net capital, and in the case of a futures commission merchant withsecurities in segregation pursuant to section 4d(2) of the Act and the regulations inthis chapter which were not deposited by customers, the percentages specified inRule 240.15c3-1(c)(2)(vi) of the Securities and Exchange Commission (17 CFR240.15c3-1(c)(2)(vi)) (“securities haircuts”) and 100 percent of the value of “non-marketable securities” as specified in Rule 240.15c3-1(c)(2)(vii) of the Securitiesand Exchange Commission (17 CFR 240.15c3-1(c)(2)(vii));
(vi) In the case of securities options and/or other options for which a haircuthas been specified for the option or for the underlying instrument in §240.15c3-1202 Beat the Forex Dealer
 
appendix A of this title, the treatment specified in, or under, §240.15c3-1 appendixA, after effecting certain adjustments to net capital for listed and unlisted optionsas set forth in such appendix;
(vii) In the case of an applicant or registrant who has open contractual commitments,as hereinafter defined, the deductions specified in §240.15c3—1(c)(2)(viii) of thistitle;
(viii) In the case of a futures commission merchant, for undermargined customercommodity futures accounts and commodity option customer accounts the amountof funds required in each such account to meet maintenance margin requirementsof the applicable board of trade or if there are no such maintenance margin require-ments, clearing organization margin requirements applicable to such positions, afterapplication of calls for margin or other required deposits which are outstandingthree business days or less. If there are no such maintenance margin requirementsor clearing organization margin requirements, then the amount of funds required toprovide margin equal to the amount necessary after application of calls for marginor other required deposits outstanding three business days or less to restore orig-inal margin when the original margin has been depleted by 50 percent or more:Provided, To the extent a deficit is excluded from current assets in accordancewith paragraph (c)(2)(i) of this section such amount shall not also be deductedunder this paragraph (c)(5)(viii). In the event that an owner of a customer accounthas deposited an asset other than cash to margin, guarantee or secure his account,the value attributable to such asset for purposes of this subparagraph shall be thelesser of (A) the value attributable to the asset pursuant to the margin rules of theapplicable board of trade, or (B) the market value of the asset after application ofthe percentage deductions specified in this paragraph (c)(5);
(ix) In the case of a futures commission merchant, for undermargined commodityfutures and commodity option noncustomer and omnibus accounts the amount offunds required in each such account to meet maintenance margin requirements ofthe applicable board of trade or if there are no such maintenance margin require-ments, clearing organization margin requirements applicable to such positions, afterapplication of calls for margin or other required deposits which are outstandingtwo business days or less. If there are no such maintenance margin requirementsor clearing organization margin requirements, then the amount of funds required toprovide margin equal to the amount necessary after application of calls for marginor other required deposits outstanding two business days or less to restore originalmargin when the original margin has been depleted by 50 percent or more: Pro-vided, To the extent a deficit is excluded from current assets in accordance withparagraph (c)(2)(i) of this section such amount shall not also be deducted underthis paragraph (c)(5)(ix). In the event that an owner of a noncustomer or omnibusaccount has deposited an asset other than cash to margin, guarantee or secure hisaccount the value attributable to such asset for purposes of this subparagraph shallbe the lesser of (A) the value attributable to such asset pursuant to the marginCFTC Minimum Finance Requirement 203
 
tules of the applicable board of trade, or (B) the market value of such asset afterapplication of the percentage deductions specified in this paragraph (c)(5);
(x) In the case of open futures contracts and granted (sold) commodity options heldin proprietary accounts carried by the applicant or registrant which are not coveredby a position held by the applicant or registrant or which are not the result of a“changer trade” made in accordance with the rules of a contract market:
(A) For an applicant or registrant which is a clearing member of a clearing organi-zation for the positions cleared by such member, the applicable margin requirementof the applicable clearing organization;
(B) For an applicant or registrant which is a member of a self-regulatory organiza-tion 150 percent of the applicable maintenance margin requirement of the applicableboard of trade, or clearing organization, whichever is greater;
(C) For all other applicants or registrants, 200 percent of the applicable maintenancemargin requirements of the applicable board of trade or clearing organization,whichever is greater; or
(D) For open contracts or granted (sold) commodity options for which there are noapplicable maintenance margin requirements, 200 percent of the applicable initialmargin requirement: Provided, The equity in any such proprietary account shallreduce the deduction required by this paragraph (c)(5)(x) if such equity is nototherwise includable in adjusted net capital;
(xi) In the case of an applicant or registrant which is a purchaser of a commodityoption not traded on a contract market which has value and such value is used toincrease adjusted net capital, ten percent of the market value of the physical orfutures contract which is the subject of such option but in no event more than thevalue attributed to such option;
(xii) In the case of an applicant or registrant which is a purchaser of a commodityoption which is traded on a contract market the same safety factor as if the applicantor registrant were the grantor of such option in accordance with paragraph (c)(5)(x)of this section, but in no event shall the safety factor be greater than the marketvalue attributed to such option;
(xiii) Five percent of all unsecured receivables includable under paragraph(c)(2)(ii)(D) of this section used by the applicant or registrant in computing “netcapital” and which are not due from:
(A) A registered futures commission merchant;
(B) A broker or dealer that is registered as such with the Securities and ExchangeCommission; or
(C) A foreign broker that has been granted comparability relief pursuant to §30.10of this chapter, Provided, however, that the amount of the unsecured receivable notsubject to the five percent capital charge is no greater than 150 percent of the current204 Beat the Forex Dealer
 
amount required to maintain futures and option positions in accounts with theforeign broker, or 100 percent of such greater amount required to maintain futuresand option positions in the accounts at any time during the previous six-monthperiod, and Provided, that, in the case of customer funds, such account is treatedin accordance with the special requirements of the applicable Commission orderissued under §30.10 of this chapter.
(xiv) For securities brokers and dealers, all other deductions specified in§240.15c3-1 of this title.
(6) Election of alternative capital deductions that have received approval of Secu-rities and Exchange Commission pursuant to §240.15c3—1(a)(7) of this title.
(i) Any futures commission merchant that is also registered with the Securities andExchange Commission as a securities broker or dealer, and who also satisfies theother requirements of this paragraph (c)(6), may elect to compute its adjusted netcapital using the alternative capital deductions that, under §240.15c3-1(a)(7) ofthis title, the Securities and Exchange Commission has approved by written order.To the extent that a futures commission merchant is permitted by the Securitiesand Exchange Commission to use alternative capital deductions for its unsecuredreceivables from over-the-counter transactions in derivatives, or for its propri-etary positions in securities, forward contracts, or futures contracts, the futurescommission merchant may use these same alternative capital deductions whencomputing its adjusted net capital, in lieu of the deductions that would otherwisebe required by paragraph (c)(2)(ii) of this section for its unsecured receivables fromover-the-counter derivatives transactions; by paragraph (c)(5)(ii) of this section forits proprietary positions in forward contracts; by paragraph (c)(5)(v) of this sectionfor its proprietary positions in securities; and by paragraph (c)(5)(x) of this sectionfor its proprietary positions in futures contracts.
(ii) Notifications of election or of changes to election. (A) No election to use thealternative market risk and credit risk deductions referenced in paragraph (c)(6)(i)of this section shall be effective unless and until the futures commission merchanthas filed with the Commission, addressed to the Director of the Division of Clearingand Intermediary Oversight, a notice that is to include a copy of the approval orderof the Securities and Exchange Commission referenced in paragraph (c)(6)(i) ofthis section, and to include also a statement that identifies the amount of tentativenet capital below which the futures commission merchant is required to providenotice to the Securities and Exchange Commission, and which also provides thefollowing information: a list of the categories of positions that the futures com-mission merchant holds in its proprietary accounts, and, for each such category, adescription of the methods that the futures commission merchant will use to calcu-late its deductions for market risk and credit risk, and also, if calculated separately,deductions for specific risk; a description of the value at risk (VaR) models to beused for its market risk and credit risk deductions, and an overview of the integra-tion of the models into the internal risk management control system of the futuresCFTC Minimum Finance Requirement 205
 
commission merchant; a description of how the futures commission merchant willcalculate current exposure and maximum potential exposure for its deductions forcredit risk; a description of how the futures commission merchant will determineinternal credit ratings of counterparties and internal credit risk weights of counter-parties, if applicable; and a description of the estimated effect of the alternativemarket risk and credit risk deductions on the amounts reported by the futurescommission merchant as net capital and adjusted net capital.
(B) A futures commission merchant must also, upon the request of the Commissionat any time, supplement the statement described in paragraph (c)(6)(ii)(A) of thissection, by providing any other explanatory information regarding the computationof its alternative market risk and credit risk deductions as the Commission mayrequire at its discretion.
(C) A futures commission merchant must also file the following supplementalnotices with the Director of the Division and Clearing and Intermediary Oversight:
(1) A notice advising that the Securities and Exchange Commission has imposedadditional or revised conditions for the approval evidenced by the order refer-enced in paragraph (c)(6)(i) of this section, and which describes the new or revisedconditions in full, and
(2) A notice which attaches a copy of any approval by the Securities and ExchangeCommission of amendments that a futures commission merchant has requested forits application, filed under 17 CFR 240.15c3- le, to use alternative market risk andcredit risk deductions approved by the Securities and Exchange Commission.
(D) A futures commission merchant may voluntarily change its election to use thealternative market risk and credit risk deductions referenced in paragraph (c)(6)(i)of this section, by filing with the Director of the Division of Clearing and Intermedi-ary Oversight a written notice specifying a future date as of which it will no longeruse the alternative market risk and credit risk deductions, and will instead computesuch deductions in accordance with the requirements otherwise applicable underparagraph (c)(2)(ii) of this section for unsecured receivables from over-the-counterderivatives transactions; by paragraph (c)(5)(ii) of this section for proprietary posi-tions in forward contracts; by paragraph (c)(5)(v) of this section for proprietarypositions in securities; and by paragraph (c)(5)(x) of this section for proprietarypositions in futures contracts.
(iii) Conditions under which election terminated. A futures commission merchantmay no longer elect to use the alternative market risk and credit risk deduc-tions referenced in paragraph (c)(6)(i) of this section, and shall instead com-pute the deductions otherwise required under paragraph (c)(2)(ii) of this sectionfor unsecured receivables from over-the-counter derivatives transactions; by para-graph (c)(5)(ii) of this section for proprietary positions in forward contracts; byparagraph (c)(5)(v) of this section for proprietary positions in securities; and by206 Beat the Forex Dealer
 
paragraph (c)(5)(x) of this section for proprietary positions in futures contracts,upon the occurrence of any of the following:
(A) The Securities and Exchange Commission revokes its approval of the marketrisk and credit risk deductions for such futures commission merchant;
(B) A futures commission merchant fails to come into compliance with its filingrequirements under this paragraph (c)(6), after having received from the Directorof the Division of Clearing and Intermediary Oversight written notification thatthe firm is not in compliance with its filing requirements, and must cease usingalternative capital deductions permitted under this paragraph (c)(6) if it has notcome into compliance by a date specified in the notice; or
(C) The Commission by written order finds that permitting the futures commissionmerchant to continue to use such alternative market risk and credit risk deductionsis no longer necessary or appropriate for the protection of customers of the futurescommission merchant or of the integrity of the futures or options markets.
(iv) Additional filing requirements. Any futures commission merchant that elects touse the alternative market risk and credit risk deductions referenced in paragraph(c)(6)(i) of this section must file with the Commission, in addition to the filingsrequired by paragraph (c)(6)(ii) of this section, copies of any and all of the followingdocuments, at such time as the originals are filed with the Securities and ExchangeCommission:
(A) Information that the futures commission merchant files on a monthly basis withits designated examining authority or the Securities and Exchange Commission,whether by way of schedules to its FOCUS reports or by other filings, in satisfactionof 17 CFR 240.17a—5(a)(5)(i);
(B) The quarterly reports required by 17 CFR 240.17a—5(a)(5)(ii);(C) The supplemental annual filings as required by 17 CFR 240.17a—5(k);
(D) Any notification to the Securities and Exchange Commission or the futurescommission merchant’s designated examining authority of planned withdrawals ofexcess net capital; and
(E) Any notification that the futures commission merchant is required to file withthe Securities and Exchange Commission when its tentative net capital is below anamount specified by the Securities and Exchange Commission.
(7) Liabilities are “‘adequately collateralized” when, pursuant to a legally enforce-able written instrument, such liabilities are secured by identified assets that areotherwise unencumbered and the market value of which exceeds the amount ofsuch liabilities.
(8) The term contractual commitments shall include underwriting, when issued,when distributed, and delayed delivery contracts; and the writing or endorsementof security puts and calls and combinations thereof; but shall not include unclearedCFTC Minimum Finance Requirement 207
 
regular way purchases and sales of securities. A series of contracts of purchase orsale of the same security, conditioned, if at all, only upon issuance, may be treatedas an individual commitment.
(d) Each applicant or registrant shall have equity capital (inclusive of satisfactorysubordination agreements which qualify under this paragraph (d) as equity capital)of not less than 30 percent of the debt-equity total, provided, an applicant orregistrant may be exempted from the provisions of this paragraph (d) for a periodnot to exceed 90 days or for such longer period which the Commission may, uponapplication of the applicant or registrant, grant in the public interest or for theprotection of investors. For the purposes of this paragraph (d):
(1) Equity capital means a satisfactory subordination agreement entered into by apartner or stockholder or limited liability company member which has an initialterm of at least 3 years and has a remaining term of not less than 12 months if:
(i) It does not have any of the provisions for accelerated maturity provided for byparagraphs (h)(2) (ix)(A), (x)(A), or (x)(B) of this section, or the provisions allow-ing for special prepayment provided for by paragraph (h)(2)(vii)(B) of this section,and is maintained as capital subject to the provisions restricting the withdrawalthereof required by paragraph (e) of this section; or
(ii) The partnership agreement provides that capital contributed pursuant to a satis-factory subordination agreement as defined in paragraph (h) of this section shall inall respects be partnership capital subject to the provisions restricting the withdrawalthereof required by paragraph (e) of this section, and
(A) In the case of a corporation, the sum of its par or stated value of capital stock,paid in capital in excess of par, retained earnings, unrealized profit and loss, andother capital accounts.
(B) In the case of a partnership, the sum of its capital accounts of partners (inclu-sive of such partners’ commodities, options and securities accounts subject to theprovisions of paragraph (e) of this section), and unrealized profit and loss.
(C) In the case of a sole proprietorship, the sum of its capital accounts of the soleproprietorship and unrealized profit and loss.
(D) In the case of a limited liability company, the sum of its capital accounts oflimited liability company members, and unrealized profit and loss. (A)
(2) Debt-equity total means equity capital as defined in paragraph (d)(1) of thissection L) plus the outstanding principal amount of satisfactory subordination agree-ments. E
(e) No equity capital of the applicant or registrant or a subsidiary’s or affiliate’sequity x capital consolidated pursuant to paragraph (f) of this section, whether inthe form of (A) capital contributions by partners (including amounts in the com-modities, options and n securities trading accounts of partners which are treatedas equity capital but excluding d amounts in such trading accounts which are not20