The Arbitration Eligibility Rule

The Arbitration Subcommittee of the Securities Industry Association (SIA)* provides comments to the National Association of Securities Dealers (NASD) Regulation, Inc. on the NASD’s memo to members of the Securities Industry Conference on Arbitration dated August 28, 1996 regarding the eligibility rule. SIA requests the NASD reconsider its position because: 1) the interpretation is contrary to the agreement between the parties to the arbitration; 2) the interpretation is contrary to the intention of the rule and its uniform interpretation since its adoption; 3) Since this constitutes a new interpretation of an existing rule, before it can become effective it must be submitted to the Securities Exchange Commission (SEC) for approval; 4) this interpretation will increase the necessity to petition courts to resolve the question of arbitrability; and 5) this interpretation is contrary to the law as interpreted by five U.S. Circuit Courts.

*SIFMA is the product of a merger between the Securities Industry Association (SIA) and The Bond Market Association (TBMA) in 2006.