Congress To Focus On Proposed Movie Exchanges
April 19, 2010
| 11:10 AM
Two congressional panels this week will take action to address concerns over proposals to create movie futures exchanges, which several movie industry groups oppose.
The Senate Agriculture Committee on Wednesday is set to mark up a financial regulatory reform measure introduced by Senate Agriculture Chairwoman Blanche Lincoln, D-Ark., that includes a provision that would ban the creation of exchanges that would allow investors to buy and sell futures contracts linked to movie box office receipts.
And in the House, the Agriculture General Farm Commodities and Risk Management Subcommittee will hold a hearing on Thursday on the two proposals pending at the Commodity Futures Trading Commission to create movie future exchanges. Among those expected to testify are Motion Picture Association of America President Bob Pisano.
The CFTC on Friday approved Media Derivatives application as a "contract market," the first step in a two-step process before it can begin offering a box-office trading service on its online marketplace. The firm must now gain approval to actually trade contracts based on box office receipts, a CFTC spokesman said. The commission also may decide as soon as Tuesday whether to approve the application from Cantor Future Exchange to become a designated contract market. In a news release, the CFTC said it is required to approve such applications if the applicant meets criteria outlined in law.
"The commission has not approved the trading of any futures or options related to box office receipts at this time," the CFTC said in a news release Friday.
Several movie industry groups have written the CFTC to urge it to reject the proposals. They voiced concern about the commission's initial approval of Media Derivative's bid to operate an exchange. Several lawmakers have echoed the concerns raised about the exchanges by the movie industry.
"We note that in making their decision, a majority of the [CFTC] commissioners raised the same concerns that we have about the contracts themselves, concerns related to whether they can be manipulated, whether they serve a true hedging purpose, and questions about whether the contracts should be approved," the Directors Guild of America, the Independent Film and Television Alliance, the MPAA and the National Association of Theatre Owners said in a news release.
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