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Code of Arbitration



SECTION 6. INITIATION OF ARBITRATION.
[Effective dates of amendments: June 28, 1985; January 28, 1986; November 9, 1988; July 12, 1989; June 12, 1991; February 18, 1992; May 17, 1993; May 1, 1994; March 12, 1996; June 7, 1996; June 23, 1997; June 1, 1999; March 1, 2002; June 13, 2005; June 5, 2007; October 1, 2009; October 18, 2010; and January 15, 2014]

An arbitration proceeding under this Code shall be initiated as follows:

(a) Notice of Intent to Arbitrate.

If the two-year time limit under Section 5 of this Code is close to expiring, a person wanting to file an Arbitration Claim may notify NFA, either in writing or orally, of such person's intent to arbitrate. NFA shall maintain a record of the receipt of each such notice and shall promptly provide such person with a copy of this Code and an Arbitration Claim form.

(b) Arbitration Claim Pursuant to a Notice of Intent to Arbitrate.

If a person who files a notice of intent to arbitrate decides to proceed with NFA arbitration, such person shall, within 35 days after the date NFA provided the person with a copy of the Code and an Arbitration Claim form under Section 6(a) above, serve a completed Arbitration Claim on NFA.

(c) Arbitration Claim

NFA shall promptly review each Arbitration Claim for completeness. Any Arbitration Claim which NFA deems to be incomplete, or which is not accompanied by the appropriate fee, shall be returned to the filing party by NFA. In that event, the filing party shall serve a completed Arbitration Claim on NFA, together with any unpaid fee, within 20 days following service by NFA. NFA shall reject any Arbitration Claim which has not been timely filed, or for which the appropriate fee has not been paid.

(d) Notice to Respondent.

    (1) NFA shall promptly serve a copy of the completed Arbitration Claim on each person named therein as a Respondent.

    (2) If a guaranteed IB is named in the Arbitration Claim as a Respondent, NFA shall promptly serve a copy of the completed Arbitration Claim on the Member FCM or RFED that guaranteed the IB during the time of the acts or transactions involved in the claim. That Member FCM or RFED may intervene in the arbitration proceeding if it chooses to.

(e) Answer to an Arbitration Claim.

A Respondent shall serve its Answer on NFA and concurrently serve a copy on the Claimant within the time period provided below. Any Member FCM or RFED served with the Arbitration Claim under Section 6(d)(2) above that wishes to intervene in the arbitration proceeding must serve an Answer and written notice of intervention on NFA and concurrently serve a copy on the Claimant within the time period provided below for filing the Answer. An allegation in the Arbitration Claim that is not denied in the Answer shall be deemed by the Panel to be admitted.

    (1) Claims of $50,000 or Less. Where the Arbitration Claim amount does not exceed $50,000, the Answer shall be served within 20 days following service of the Arbitration Claim by NFA.

    (2) Claims of more than $50,000 through $100,000. Where the Arbitration Claim amount exceeds $50,000 but is not more than $100,000, the Answer shall be served within 45 days following service of the Arbitration Claim by NFA. An arbitration service fee of $275.00 shall accompany each Answer. Any Answer which is not accompanied by the appropriate fee shall be returned to the filing party by NFA. In that event, the filing party shall serve a completed Answer on NFA, together with any unpaid fee, within 20 days following service by NFA. NFA shall reject any Answer for which the appropriate fee has not been paid. Each Respondent who files an Answer but does not pay the service fee will have waived its right to an oral hearing and to otherwise participate in the proceeding. However, the Panel may, for good cause shown, accept the Answer and allow the Respondent to participate.

    (3) Claims of more than $100,000. Where the Arbitration Claim amount exceeds $100,000, the Answer shall be served within 45 days following service of the Arbitration Claim by NFA. An arbitration service fee of $675.00 shall accompany each Answer. Any Answer which is not accompanied by the appropriate fee shall be returned to the filing party by NFA. In that event, the filing party shall serve a completed Answer on NFA, together with any unpaid fee, within 20 days following service by NFA. NFA shall reject any Answer for which the appropriate fee has not been paid. Each Respondent who files an Answer but does not pay the service fee will have waived its right to an oral hearing and to otherwise participate in the proceeding. However, the Panel may, for good cause shown, accept the Answer and allow the Respondent to participate. 

(f) Counterclaim and Cross-claim.

Any counterclaim or cross-claim under Section 2(a)(2) must be asserted in the Answer, unless the person against whom the counterclaim or cross-claim is asserted consents to a later assertion of the counterclaim or cross-claim. If any counterclaim or cross-claim is asserted, the party asserting the counterclaim or cross-claim shall promptly remit the appropriate fee to NFA. (See Sections 11 and 18.) Any counterclaim or cross-claim which NFA deems to be incomplete, or which is not accompanied by the appropriate fee, shall be returned to the filing party by NFA. In that event, the filing party shall serve a completed counterclaim or cross-claim on NFA, together with any unpaid fee, within the time period provided below. NFA shall reject any counterclaim or cross-claim which has not been timely filed, or for which the appropriate fee has not been paid.

    (1) Claims of $50,000 or Less. Where the aggregate claim amount does not exceed $50,000, the completed counterclaim or cross-claim shall be served within 10 days following service of the incomplete counterclaim or cross-claim by NFA.

    (2) Claims of more than $50,000. Where the aggregate claim amount exceeds $50,000, the completed counterclaim or cross-claim shall be served within 20 days following service of the incomplete counterclaim or cross-claim by NFA.

(g) Reply to Counterclaim or Cross-claim.

The person against whom the counterclaim or cross-claim is asserted shall serve its Reply to the counterclaim or cross-claim on NFA and concurrently serve a copy on the counterclaiming or cross-claiming Respondent within the time period provided below. Any allegation in the counterclaim or cross-claim that is not denied in the Reply shall be deemed by the Panel to be admitted.

    (1) Claims of $50,000 or Less. Where the aggregate claim amount does not exceed $50,000, the Reply shall be served within 10 days following service of the Answer, counterclaim or cross-claim by NFA.

    (2) Claims of more than $50,000. Where the aggregate claim amount exceeds $50,000, the Reply shall be served within 35 days following service of the Answer, counterclaim or cross-claim by NFA.

(h) Third-party Claim.

Any third-party claim under Section 2(a)(2) must be asserted in the Answer, unless the third party consents to a later assertion of the claim. If the third party is not a Member or Associate, such person must agree or have agreed to submit to arbitration. If any third-party claim is asserted, the Respondent asserting the third-party claim shall promptly remit the appropriate fee to NFA. (See Sections 11 and 18 below.) Any third-party claim which NFA deems to be incomplete, or which is not accompanied by the appropriate fee, shall be returned to the filing party by NFA. In that event, the filing party shall serve a completed third-party claim on NFA, together with any unpaid fee, within the time period provided below. NFA shall reject any third-party claim which has not been timely filed, or for which the appropriate fee has not been paid.

    (1) Claims of $50,000 or Less. Where the aggregate claim amount does not exceed $50,000, the completed third-party claim shall be served within 10 days following service of the incomplete third-party claim by NFA.

    (2) Claims of more than $50,000. Where the aggregate claim amount exceeds $50,000, the completed third-party claim shall be served within 20 days following service of the incomplete third-party claim by NFA.

(i) Notice to Third-party Respondent.

NFA shall promptly serve a copy of the completed third-party claim on each person named therein as a Respondent, and a copy of any agreement to arbitrate.

(j) Answer to Third-party Claim.

A third-party Respondent shall serve its Answer on NFA and concurrently serve a copy on the third-party Claimant within the time period provided below. An allegation in the third-party claim that is not denied in the Answer shall be deemed by the Panel to be admitted.

    (1) Claims of $50,000 or Less. Where the aggregate claim amount does not exceed $50,000, the Answer shall be served within 20 days following service of the third-party claim by NFA.

    (2) Claims of more than $50,000. Where the aggregate claim amount exceeds $50,000, the Answer shall be served within 45 days following service of the third-party claim by NFA.

(k) Amendments to Claims.

After the appointment of a Panel, no new or different claim may be filed except with the Panel's consent.

(l) Late Answer, Reply or Notice of Intervention.

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.

(m) Consolidation and Joinder.

    (1) When Arbitration Claims involving common questions of fact or arising from the same act or transactions are received by the Secretary, the Secretary may, whether or not at the request of any party, order any or all of the proceedings to be consolidated for hearing in the interest of providing a fair, equitable and expeditious procedure and may take such action concerning the proceedings herein as may tend to avoid unnecessary or unreasonable delay.

    (2) A party may join multiple claims in a single Arbitration Claim involving common questions of fact or arising from the same act or transactions if the claims involve common questions of fact, arise from the same act or transactions, are filed by the same person against the same Respondents (even if the person filing the Arbitration Claim is acting in different capacities) or are filed on behalf of an individual and a corporation against the same Respondents if the individual is the sole shareholder of the corporation. The Secretary may, whether or not at the request of any party, order any or all joined claims to be separated in the interest of providing a fair, equitable or expeditious procedure or to avoid unnecessary or unreasonable delay.

(n) Special Consolidation Procedures for Claims Involving Customer Segregated Funds and/or Customer Secured Amount Funds Losses.

In the event of an FCM insolvency that results in customer segregated funds and/or customer secured amount funds losses in excess of $50 million based on the net liquidating value of customer accounts as of the close of business on the date of the bankruptcy, one or more groups of customers of the FCM may consolidate their claims for monetary losses by filing a single arbitration claim under the Code subject to the following additional provisions:

    (1) At the time of filing the consolidated claim, the consolidated group of claimants must indicate the claim is being filed under Section 6(n);

    (2) The consolidated group of claimants must be represented by an attorney(s) acting on behalf of the consolidated group, and individual claimants are not permitted to have their own counsel representing them in the arbitration;

    (3) The consolidated group of claimants may not proceed against any Respondent(s) that has filed a petition for bankruptcy under the U.S. Bankruptcy Code, absent bankruptcy court approval;

    (4) The consolidated group of claimants shall remit a filing fee of $20,000 and a hearing fee deposit of $30,000 to NFA at the time the consolidated claim is filed. Where the hearing fee deposit paid by the consolidated group of claimants is not sufficient to cover fees assessed to the consolidated group of claimants for pre-hearing motions, preliminary hearing requests and/or postponement requests (if any) and hearing sessions based on the standard, preset fee NFA pays to the arbitrators, NFA will assess and collect additional hearing fees from the consolidated group of claimants to cover the additional standard, preset fees to be paid to the arbitrators;

    (5) The relief requested by the consolidated group of claimants shall be limited to monetary damages equal to the net liquidating value of each individual claimant's account(s) as of the close of business on the day of the bankruptcy, but may also include a request for interest, costs and fees where appropriate under the Code;

    (6) Respondent(s) must serve the Answer and any other pleadings or documents on the attorney(s) representing the consolidated group of claimants and not the individual claimants;

    (7) Any pre-hearing motions or requests for preliminary hearing are subject to a fee of $675 assessed against the filing party. Fees assessed against the consolidated group of claimants will be applied against the initial hearing deposit. Fees assessed against the Respondent(s) are due at the time of filing;

    (8) Any postponement fee shall be assessed and remitted in accordance with Section 11(c) of the Code, except that if the consolidated group of claimants file the postponement request, the fee shall be assessed against the initial hearing fee deposit;

    (9) Site selection preferences are limited to Chicago or New York;

    (10) Any hearing fees collected from the consolidated group of claimants that are not paid to the arbitrators will be refunded to the consolidated group; and

    (11) Except as provided above, the consolidated claim shall otherwise be administered in accordance with the existing provisions of the Code.

(o) Dismissal Without Prejudice.

The Panel may, at the written request of a party or on its own motion, dismiss without prejudice any claim which it determines is not a proper subject for NFA arbitration.

(p) Attestation.

Any claim, answer, counterclaim, cross-claim, reply to counterclaim or cross-claim, third-party claim, or answer to third-party claim must include the following attestation: "The undersigned certifies that, to the best of his/her knowledge, information and belief, formed after a reasonable inquiry, the statements set forth in this pleading are true and correct."

 
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