Movie Groups Seek To Refute Exchange Supporters' Claims
May 3, 2010
| 4:24 PM
Movie industry groups are keeping up their aggressive effort to block two firms from launching futures exchanges that would be based on speculation over motion picture box office receipts.
In a letter sent late last week to senators, five movie industry groups, including the Motion Picture Association of America, tried to dispute recent claims made by supporters of such exchanges, who are aiming to strip language from a financial regulatory bill that would ban movie futures exchanges. The Commodity Futures Trading Commission 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.
But movie industry groups argued in the letter that the proposed movie futures contracts differ from other futures contracts in key ways, noting that unlike other futures markets, there is no cash market underlying the proposed movie futures contracts and they pose a greater risk of manipulation. The letter also disputes claims that the movie industry is split on the issue of the movie exchanges.
"The overwhelming consensus in the industry is that no one wants these contracts or has any intention of using them. They stand only to cause harm," according to the letter signed by the Directors Guild of America, the Independent Film and Television Alliance, the International Alliance of Theatrical Stage Employees, the MPAA, and the National Association of Theatre Owners. "This effort to create a synthetic derivative will serve the interest of no one other than the two exchanges who would reap transaction fees and those who are 'inside' with highly technical information, not the public interest. The ban in the Senate bill is both appropriate and necessary."
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