B.O. trading venture won't launch despite OK

5:35 PM PST 06/28/2010 by Alex Ben Block, AP

Cantor gets CFTC approval; pending ban stands in way

Despite winning approval Monday from a federal agency to offer its first products, the backers of the Cantor Futures Exchange conceded that because of pending legislation banning trading in derivatives based on boxoffice results, they will not be able to launch their venture.

"In light of this pending legislation, Cantor is continuing to assess its options for providing risk management and financing tools to the motion pictures industry," Cantor Fitzgerald exchange president Richard Jaycobs said.

The Commodity Futures Trading Commission voted 3 to 2 to approve the Cantor request -- the same result as the one June 15 that approved a similar request from the Trend Exchange, which also wants to sell futures contracts based on boxoffice.

Officially, the contract approved Monday for Cantor was to cover the film "The Expendables." The CFTC said it gave the approval only after requesting modifications from Cantor "to guard against manipulation or any other abusive conduct in the trading of any contract by knowledgeable and informed sources within the studio."

In his written dissent, CFTC commissioner Bart Chilton said as in the earlier case he did not consider boxoffice receipts "commodities" under the legal definition. "If movie futures are traded," he wrote, "we could also have terrorism contracts or death pool contracts. None are good ideas."

The Wall Street financial reform bill that cleared the conference committee late last week includes an amendment banning such trading -- retroactive to June 1 -- and President Obama has said he will sign it into law.

Whether there will be further legal challenges by Trend Exchange or others was unclear.
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