Proposed Rule

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Proposed Amendments to Sections 3(a), 9(i), 10(g), 11(a), 14, and
15(b) of NFA's Member Arbitration Rules
(Additions are underscored and deletions are stricken)

MEMBER ARBITRATION RULES

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SECTION 3. ARBITRATION PANEL

(a) Appointment of Panel.

Except as provided under Section 7(e) of the Rules, NFA shall conduct all arbitration proceedings under these Rules shall be conducted before an arbitration Panel consisting of the following:

(1) Where the aggregate claim amount does not exceed $100,000, NFA shall appoint one arbitrator. However, if the aggregate amount of the claim exceeds $50,000 but is not more than $100,000, NFA shall appoint three arbitrators if one of the parties serves a written request on NFA for three arbitrators by no later than 30 days after the last pleading is due or the sole arbitrator asks NFA to appoint two additional arbitrators.

(2) Where the aggregate claim amount exceeds $100,000, NFA shall appoint three arbitrators.

All arbitration Panels shall be appointed by the Secretary and consist of individuals who are three NFA Members or individuals connected therewith (one such Member or individual designated as Panel Chairperson 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.

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SECTION 9. HEARING.

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(i) Summary Proceeding.

The proceeding shall be conducted entirely through written submissions when:

(1) the aggregate amount of the claims (exclusive of interest and costs) does not exceed $10,000, unless the Secretary or the Panel directs otherwise;

(2) the aggregate amount of the claims (exclusive of interest and costs) is more than $10,000 but not more than $50,000 20,000, unless the Secretary or the Panel directs otherwise or one of the parties to the proceeding serves a written request for an oral hearing on NFA no later than 30 days after the last pleading is due; or

(3) the Panel has consented to the written agreement of the parties to waive the oral hearing. A written agreement is not required of any party which has waived its right to an oral hearing under any other provision of these Rules.

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SECTION 10. AWARD, SETTLEMENT AND WITHDRAWAL

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(g) Failure to Comply

(1) The President may, on 30 days written notice, summarily suspend a Member or Associate W when the any Member or Associate:

(i) fails to comply with an award within 30 days from the date of service of the award by NFA or such other period as specified in the award 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; or

(ii) 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

(iii) fails to comply with a settlement agreement executed in connection with an NFA-sponsored pre-arbitration mediation proceeding within 30 days after the time stated in the settlement agreement; or

(v) (v) 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

The suspension shall remain in effect 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.

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SECTION 11. ARBITRATION FEES.

(a) Filing and Hearing Fees.

Each Member or Associate filing a claim under these Rules shall pay a filing and hearing fee based on the amount claimed, including punitive and treble damages but exclusive of interest and costs, as follows:

Amount of Claim Filing Fee Hearing Fee
$0.00 - $10,000.00 $750.00 $125.00
$10,000.01 - $20,000.00 $1,900.00 $125.00 200.00
$20,000.01 - $50,000.00 $1,900.00 $275.00
$50,000.01 - $150,000.00 $4,400.00 $1,275.00
$150,000.01 - $500,000.00 $4,400.00 $2,550.00
More than $500,000.00 $4,400.00 $5,100.00

NFA will assess hearing fees for discovery conferences, hearing plan conferences, and preliminary or other hearing sessions. Where the hearing fees paid by the parties is not enough to cover the standard preset fees to be paid by NFA to the arbitrators, NFA shall collect additional fees to cover the fees to be paid to the arbitrators. If a case requires more than four days of hearing, the hearing fees will be twice the standard preset fees, unless the arbitrators order the fees to remain at the standard amount. The arbitrators, in their discretion, may assess the entire fee against any party or may divide the fee among any or all parties. Hearing fees shall be paid to NFA in advance of the hearing sessions to which they apply.

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SECTION 14. MEDIATION.

After the completion of the time period for the filing of all pleadings, the Secretary NFA may, in its his discretion, notify the parties of the option to proceed to mediation.

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SECTION 15. MISCELLANEOUS.

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(b) Service of Process.

Unless otherwise indicated, service may be accomplished by hand delivery, or by first class or certified mail, or by use of a generally recognized overnight delivery service to the party's last known business or home address on record with NFA. Documents that are not pleadings may also be served by facsimile or electronic mail on NFA and any party who has consented to service by that method. All documents which are served on NFA shall be concurrently served on each party who has filed a pleading using methods designed to ensure that NFA and all parties will receive the documents on the same day. Service on a party's representative shall be service on the party.

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