Reel It In: MPAA Upset By Proposed Movie Futures Market
Wagering on the future of movies? Don't bet on it, says Hollywood's main lobbying group.
The Motion Picture Association of America, the lobbying group that represents the six major film studios, doesn't like the idea that two companies -- New York-based, the Cantor Exchange and Indiana-based, Veriana -- are planning to start a commodity-like futures market based on movie box-office revenues.
The MPAA has notified the U.S. Commodity Futures Trading Commission about its objection -- per a story in the Los Angeles Times. The group calls these planned commodity markets the "equivalent of legalized gambling on movie receipts," according to a letter written by Bob Pisano, MPAA's chief executive.
As with other commodities, both the Cantor Exchange and Veriana view the exchange's hedges as a chance for movie studios to reduce the risk of investment. For example, historically, farmers have bought and sold corn or wheat futures to protect themselves against crop failures.
But the MPAA's worries are about abuse -- that speculators will drive prices up or down with little regard for the type of risk-averse investing that defines futures markets. These investors may also have inside knowledge of a movie's marketing plans, which deprives other investors of a fair investment environment.
For its part, Cantor Exchange, which is an offshoot of Wall Street investment company Cantor Fitzgerald, says it has an enforcement plan to deal with insider trading.
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Having lost millions on the Hollywood Stock Exchange (HSX.com) over the years, I'm getting a kick out of this article.