Proposed amendments to NFA Member Arbitration Rules
(additions are underscored and deletions are [bracketed]):
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SECTION 2. ARBITRABLE DISPUTES
(a) Claims between Members. Except as provided in Sections 4 and 5 of these Rules with respect to timeliness requirements, disputes between Members [and Associates] shall be arbitrated under these Rules unless:
(2) the parties to such dispute are all required by the rules of another self-regulatory organization to submit the controversy to the settlement procedures of that self-regulatory organization; [or]
(3) all parties to the dispute are members of a contract market which has jurisdiction over the dispute[.] or
(4) one of the parties to the dispute is a party to a dispute pending in another forum and files a cross-claim or third-party claim in that forum. The cross-claim or third-party claim must arise out of an act or transaction that is the subject of the claim pending in that forum.
(b) Claims between Members and Associates. Except as provided in Sections 4 and 5 of these Rules with respect to timeliness requirements, disputes between Members and Associates and between Associates shall be arbitrated under these Rules, at the election of the person filing the claim, unless:
(2) the parties to such dispute are all required by the rules of another self-regulatory organization to submit the controversy to the settlement procedures of that self-regulatory organization; or
(3) all parties to the dispute are members of a contract market which has jurisdiction over the dispute.
[(b)] (c) Counterclaims, Cross-claims and Third-party Claims. Except as provided in Sections 4 and 5 of these Rules with respect to timeliness requirements, a counterclaim, cross-claim or third-party claim must [may] be asserted in an arbitration brought under paragraph (a) above and may be asserted in an arbitration brought under paragraph (b) above if the counterclaim, cross-claim or third-party claim arises out of an act or transaction that is the subject of the Demand for Arbitration.
SECTION 3. ARBITRATION PANEL
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Except as provided under Section 7(e) of the Rules, [A]all arbitration proceedings under these Rules shall be conducted before an arbitration panel consisting of three NFA Members or individuals connected therewith (one such Member or individual designated as Panel Chairman) appointed by the Secretary, except that where the aggregate amount of the claims (exclusive of interest and costs) do not exceed $20,000, the Panel shall consist of one such person unless the Secretary directs otherwise.
SECTION 5. INITIATION OF ARBITRATION
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(1) NFA shall promptly serve a copy of the completed Demand for Arbitration on each person named therein as a Respondent.
(2) If a guaranteed IB is named in the Demand for Arbitration as a Respondent, NFA shall promptly serve a copy of the completed Demand for Arbitration on the Member FCM that guaranteed the IB during the time of the acts and transactions involved in the claim. That Member FCM may intervene in the arbitration proceeding if it chooses to.
(e) Answer to a Demand for Arbitration
The Respondent shall serve an Answer on NFA within 45 days from the date of service of the Demand for Arbitration on the Respondent by NFA. The Respondent shall concurrently serve a copy of the Answer on the Claimant. Any Member FCM served with the Demand for Arbitration under Section 5(d)(2) above that wishes to intervene in the arbitration proceeding must serve an Answer and written notice of intervention on NFA within 45 days from the date of service of the Demand for Arbitration on the Member FCM by NFA. The Member FCM shall concurrently serve a copy of the Answer and notice of intervention on the Claimant. An allegation in the Demand for Arbitration that is not denied in the Answer shall be deemed by the Panel to be admitted.
NFA shall accept any Answer or Reply filed prior to the hearing. However, NFA or any party may present an objection to the Panel with regard to the timeliness of any filing. NFA will not accept a late notice of intervention unless the party filing the late notice explains in writing its reasons for the lateness and obtains the Panel's consent to file the late notice.
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(1) A motion for emergency relief may be filed with a Demand for Arbitration or at any time after a Demand is filed. The motion should include a statement explaining why emergency relief is needed and indicate the party or parties against whom the relief is sought. The party filing the motion shall pay a non-refundable fee of $500 and a hearing fee of $150 when filing the motion.
(2) The party filing the motion shall concurrently serve a copy of the motion on the party against whom relief is sought. NFA shall schedule a hearing on the motion no later than five business days after the motion is received by NFA. A party against whom relief is sought may serve a written response on NFA and the other party at or before the hearing. Service under this section must be accomplished by hand delivery or by use of a generally recognized overnight delivery service.
(3) One arbitrator will decide a motion for emergency relief unless NFA or the arbitrator directs otherwise. The arbitrator or arbitrators deciding the motion for emergency relief may be different from the arbitrator or arbitrators who are assigned to hear the Demand for Arbitration.
(4) When the hearing fee paid under Section 7(e)(1) above is not enough to cover the standard preset hearing fees to be paid by NFA to the arbitrator or arbitrators for the time spent hearing the motion, NFA shall collect additional fees to cover the fees to be paid to the arbitrator or arbitrators.
(5) Any order granting emergency relief shall remain in effect until NFA serves the award under Section 10 of these Rules unless the order directs otherwise. The arbitrator or arbitrators may modify the order for good cause shown.
(6) If an order is issued granting emergency relief, the arbitrator or arbitrators may expedite the hearing by setting deadlines for filing pleadings, conducting discovery, exchanging exhibits, preparing the hearing plan, and scheduling the hearing that are shorter than those established under the Rules.
[(e)] (f) Other Pre-Hearing Motions.
(1) Motions to dismiss for failing to state a claim will not be heard by the Panel. Other motions to dismiss must be included in a timely filed Answer or Reply. Motions for summary judgment may be raised at any time. Motions for directed verdict may be raised at the hearing.
(2) Except as provided in Section 7(a)(4) and Section 7(e) above, a party has 10 days from the date a pre-hearing motion is received in which to serve a written response on NFA and all other parties. However, where a motion is received less than 20 days in advance of the date the hearing or summary proceeding is scheduled to commence, NFA may, in its discretion, require a written response within less than 10 days. No written replies to a party's response to a motion will be allowed except in the Panel's discretion.
[(f)] (g) Pre-Hearing Decisions by the Arbitrators.
With the consent of the other Panel members, one or more of the arbitrators may act on behalf of the Panel to decide any pre-hearing motions from the parties or to conduct any discovery or hearing plan conference with the parties. However, the panel may not postpone the hearing, [or] or impose sanctions, dismiss a party, or dismiss all or any portion of a claim without a majority decision.
SECTION 10. AWARD, SETTLEMENT AND WITHDRAWAL
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The award may grant or deny any of the relief requested and may include an assessment of interest, costs or fees (See Sections 7, 11 and 12). A request for declaratory relief will only be heard by the arbitrators if the Respondent agrees to have the arbitrators hear the claim.
The Panel's award shall be final on the date thereof. The award may be modified by the Panel if a party submits a written request for modification which is received by NFA within 20 days from the date of service of an award on the parties, and the Panel deems modification necessary because;
(2) the arbitrators have awarded upon a matter not submitted to them, unless it is a matter to affecting the merits of the decision upon the matter submitted; or rendered an award on a matter not submitted to them; or
(3) the award is imperfect in matter of form not affecting the merits of the controversy.
NFA will not forward a modification request to the Panel unless it is based on one of the grounds listed above. The timely filing of a request for modification shall stay automatically the finality of any award until NFA rejects the request or the Panel either modifies the award or denies the request for modification.
(1) When any Member or Associate fails to comply with an award within 30 days from the date of service of the award by NFA or fails to comply with a settlement agreement within 30 days after NFA terminates the arbitration proceeding pursuant to Section 10(h) or such other period as specified in the award or settlement agreement, or fails to pay any fee assessed within the time so ordered by the Panel, and unless there is pending a request to modify the award under Section 10(c) or an application to vacate, modify or correct the award in a court of competent jurisdiction, that Member or Associate may, on 30 days written notice, be summarily suspended by the President until such award, settlement agreement, or order of the Panel has been satisfied. Any Member or Associate subject to a summary suspension may, within 30 days of the date of service of the Notice of Suspension, appeal the suspension to the Commission and may, within 10 days of service of the Notice of Suspension, petition the Commission for a stay of the suspension.
(2) A Member which guaranteed an introducing broker during the relevant time may, on 30 days written notice, be summarily suspended by the President if the guarantor fails to pay an award issued against the introducing broker under Section 10(c) or a settlement agreement entered into by the introducing broker under Section 10(h) within 30 days after the guarantor has received actual notice that the introducing broker has failed to comply with the award or settlement agreement. The suspension shall be lifted if the award or settlement agreement is satisfied.
(3) When any Member or Associate fails to comply with any interim order issued under Section 7(e) above, that Member or Associate may be summarily suspended by the President until the Member or Associate complies with the order. Any Member or Associate subject to a summary suspension may, within 30 days of the date of service of the Notice of Suspension, appeal the suspension to the Commission and may, within 10 days of service of the Notice of Suspension, petition the Commission for a stay of the suspension.
[(3)] (4) In lieu of or in addition to suspending any Member or Associate for failing to comply with an award, settlement agreement or Panel order [to pay a fee or monetary sanction], NFA may initiate disciplinary action under its Compliance Rules for the failure of any Member or Associate to comply with the award, settlement agreement or Panel's order.
NFA has the authority to interpret the provisions of these Rules.