CFTC TO Hold Hearing On Movie Exchanges
May 12, 2010
| 11:39 AM
The Commodity Futures Trading Commission announced Wednesday that it will hold a hearing next week to examine concerns over proposals to create futures exchanges based on movie box office receipts.
In a news release, the CFTC said it would hold a public meeting on May 19 to "consider issues related to the trading of futures and binary options based on motion picture box office receipts." Officials from the movie industry as well as from the two firms, Media Derivatives and Cantor Futures Exchange, seeking to offer such exchanges are expected to testify at the hearing.
The CFTC has already backed applications from Media Derivatives and Cantor Futures Exchange to be contract markets, the first step in their bid to create movie futures exchanges. The CFTC, however, has yet to approve futures contracts that would be traded on such exchanges.
Supporters argue that such exchanges will assist the industry by expanding the depth and number of financing sources available to the industry and offers an opportunity to hedge against the high risk of making movies.
The movie industry staunchly opposes such exchanges and has found sympathetic ears on Capitol Hill where several lawmakers have expressed concern with the exchanges. A ban on movies futures exchanges is included in Senate financial regulatory legislation.
In its latest filing with the CFTC, filed Tuesday, a coalition of movie industry groups including the Motion Picture Association of America argued that movie futures are not a "commodity," that they cannot be accurately priced, that the movie industry does not plan to use the futures contracts for hedging purposes, that movie futures are susceptible to manipulation and insider trading, and will harm the industry by possibly depressing box office receipts because of the perception of a movie's quality based on the price of a future.
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