RBS, Credit Suisse, BNP Paribas insist on NFA arbitration in “last look” cases

Arbitration by the United States National Futures Association (NFA) should be compelled in the “last look” cases brought by now-defunct retail Forex broker Alpari (US), according to the defendants.

In a set of documents filed with the New York Southern District Court on Friday, January 26, 2018, the Royal Bank of Scotland Group plc (LON:RBS), RBS Securities Inc., BNP Paribas SA (EPA:BNP), Credit Suisse Group AG (VTX:CSGN), Credit Suisse AG, and Credit Suisse Securities (USA) LLC, argue that the complaints against them should either be dismissed altogether or that the Court should mandate NFA arbitration.

Let’s recall that Alpari (US) has argued that NFA arbitration in these cases should no be applied, as such arbitration is reserved solely for disputes between and among NFA Members or those who were NFA Members “at the time the acts or transactions that are the subject of the dispute occurred,” while claims between an NFA Member and an “Associate” of a Member are only subject to mandatory NFA arbitration “at the election of the person filing the claim.”

In their latest filings with the Court, the defendants note that under the plain language of the NFA Rules, BNP Paribas is subject to mandatory arbitration because it is currently an NFA Member, and Alpari is subject to mandatory arbitration because it was an NFA Member at the time the disputed transactions occurred.

Regarding Credit Suisse and RBS, the defendants note that the NFA Rules provide that “disputes between and among Members shall be arbitrated under these Rules.” They do not provide that the dispute must be “solely” between Members or that a Member’s arbitration rights are forfeited when the claimant chooses to add another Member’s parent company to the case.

Also, the banks note that RBS Group, Credit Suisse Group AG, and Credit Suisse AG are not and cannot be Associated Persons and thus are not NFA Associates. Instead, they are “principals,” based on their ownership interest in NFA Members.

The banks also stress that Alpari agreed to arbitrate claims against the defendants by entering into certain pricing and liquidity agreements. Alpari admits that it entered into the pricing and liquidity agreements with Credit Suisse and with RBS, and that these agreements contain arbitration clauses.

According to the defendants, “Alpari’s repeated contentions that it asserts only claims arising from trades as part of its B-Book business are irrelevant”, as the proffered distinction between its “A-Book” and “B- Book” businesses bears on differences in its relationships with clients and its internal book keeping, not on differences in its relationship with the defendants.

Let’s recall that Alpari’s action seeks compensation for the victims of the defendants’ Last Look practices. All of the banks are alleged to have caused damage to Alpari (US) and other FX market participants as a result of the use of “Last Look” practices. All of the defendants are accused of breach of contracts on their proprietary trading platforms, breach of contracts on ECNs, as well as of unjust enrichment.