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September 17, 2007
Amendments to NFA Code of Arbitration and Member Arbitration Rules
Explanation of Rule Changes
On September 5, 2007, the Commodity Futures Trading Commission approved changes to NFA's Code of Arbitration and Member Arbitration Rules (collectively referred to as the arbitration rules). These amendments increase the minimum claim amount eligible for an oral hearing.
Under the Code, all claim amounts under $25,000 are administered by a summary proceeding, and under the Rules, all claim amounts under $50,000 are administered by a summary proceeding. Currently, however, the Code permits a party to request an oral hearing for claim amounts over $5,000, and the Rules permit a party to request an oral hearing for claim amounts over $10,000. NFA is amending both the Code and the Rules to increase the minimum claim amount for requesting an oral hearing to $15,000. These changes will become effective for all arbitration claims filed on or after October 15, 2007.
NFA adopted the oral hearing option in 1992. Although claim amounts have risen significantly since that time and NFA increased the upper limit for a summary proceeding1, the minimum claim levels for requesting an oral hearing have remain unchanged. As a result, the percentage of NFA's caseload that is administered through a summary proceeding has fallen. In fact, in the last several years, the percentage of the caseload administered through a summary has decreased from 60 percent to 40 percent.
Summary proceedings are an efficient and effective method for resolving smaller claim amounts for both the parties and NFA. NFA believes it is important that this method is used in appropriate circumstances. Therefore, NFA is amending the arbitration rules to increase the minimum amount to request an oral hearing to reflect the overall increase in claim amounts. Based on recent statistics, raising the minimum claim amount to $15,000 should increase the percentage of NFA's caseload administered through a summary proceeding to 50 percent.
If you have any questions regarding this Notice or the changes to the arbitration rules, please contact NFA's Arbitration Department at (800) 621.3570.
1 In 2001, NFA raised the ceiling for summary proceedings under the Code from $10,000 to $25,000 and the ceiling for summary proceedings under the Rules from $10,000 to $50,000.