Politicians sign letter to stop b.o. futures plan
40 members of Congress join MPAA in opposition to trading
While a decision on whether movie futures contracts based on boxoffice will begin trading still pending before the Commodities Futures Trading Commission, a bipartisan group of 40 congressmen have signed a letter to the House committee that oversees the federal commission "to express significant concern" and "offer our support for efforts to ensure that such futures markets do not become operational."
Among the members of Congress who signed the letter dated June 8 are Howard Berman (D-Calif.), Joe Barton (R-Texas), Brad Sherman (D-Calif.), Roy Blunt (R-Mo.), Mary Bono-Mack (R-Calif.), and Dan Maffei (D-N.Y.).
The letter is part of an effort by the MPAA and others opposed to movie futures trading to stop the plans by two companies that want to offer such contracts to institutional and private investors. Backers have said the futures market would be a way for movie companies and others to hedge their bets and protect their investments.
In the letter, the congressmen disagree: "We are not aware of any entity seeking to hedge such risk and therefore believe that the intended functions of these new exchanges are for purposes other than those for which legitimate futures markets exist."
Monday was the deadline for the CFTC to approve or disapprove the first product put forward, a contract by Trend Exchange aimed at big investors, which would expire just before the movie opened. Instead, at the request of the CFTC, a decision was put off at least until this coming Monday.
That brought a comment from, MPAA executive vp Greg Frazier: "We appreciate the CFTC's decision to review the application more closely. We believe both the proposal by Media Derivatives Inc., and a separate proposal by the Cantor Futures Exchange L.P., which is also still pending before the CFTC, serve no public interest and, to the contrary, can significantly harm the motion picture industry and impose new, substantial costs that do not exist today. These are proposals that ought to be under the jurisdiction of the federal gambling and gaming laws, not the federal commodity trading laws."
The CFTC has until June 28 to decide on the first product put forward by The Cantor Exchange, which would be available to small investors and would be tied to the performance of a movie until four weeks after its initial release.
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