Decision on box-office futures market delayed until next week
The fate of box-office futures won't be decided for another week.The Commodity Futures Trading Commission was set to announce Friday whether it was approving the Trend Exchange, one of two companies that has applied to allow investors to bet on the future box-office receipts of Hollywood films. Late in the afternoon, the CFTC announced that it was delaying its decision until April 16 and is awaiting more information from a third party.
On Thursday, several movie industry groups wrote to the CFTC criticizing the Trend Exchange, which was proposed by an Arizona company, Veriana Networks. The letter, which was sent by the Motion Picture Assn. of America on behalf of the six major movie studios, the National Assn. of Theater Owners, the Directors Guild of America and the Independent Film and Television Alliance, said the exchange’s “sole purpose is to provide a trading platform for instruments that do not constitute legitimate futures or option contracts, but are in essence wagers that are susceptible to manipulation.”
After the CFTC’s announcement, an MPAA spokesman said, “We appreciate the commission’s decision to take additional time to review our concerns about the harm online wagering on box-office futures could do to our industry.”
Wall Street firm Cantor Fitzgerald has proposed to set up a futures exchange similar to Veriana’s and is scheduled to receive its answer from the CFTC on April 20. The groups that wrote the letter on Thursday said that they would soon come forward with separate comments about the Cantor Exchange.
Both the Cantor Exchange and Veriana have complained that Hollywood executives waited until the last minute to air their concerns about box-office futures. The Futures Industry Assn., a trade group, came to the defense of Cantor and Veriana on Friday.
“It is clear that the MPAA is not familiar with the futures markets or the regulatory framework within which they operate,” the group said in a statement. “No one can argue that the movie-making business is without risk or that there is no need for effective risk management tools. The potential introduction of innovative instruments for managing that risk should be applauded rather than criticized.”
-- Nathaniel Popper and Ben Fritz