Senate sets roadblock to boxoffice trading

Bill would outlaw futures trading sought by Cantor, Trend

The effort by a couple of financial firms to introduce futures trading based on boxoffice results has hit a political speed bump.

The Senate Agriculture Committee on Wednesday passed legislation regarding derivatives trading that includes language that would outlaw the exact financial instruments that Cantor Exchange and Trend Exchange are determined to introduce.

The bill was passed out of committee 13-8, with one Republican, Chuck Grassley of Iowa, joining the majority Democrats.

Now that it has passed through the committee, the bill is expected to be combined with a broader bill aimed at financial reform that is championed by Sen. Chris Dodd, D-Conn.

President Obama has indicated he'd like to sign the bill -- dubbed "The Restoring American Financial Stability Act" -- as soon as Memorial Day, though for the bill to pass that soon he'd likely need at least one Republican on board to block any attempts at a filibuster.

"It's definitely at the top of the agenda," said Liz Friedlander, spokesperson for the Senate Agriculture Committee. "We anticipate they'll take it up in the next week or two. (Committee chair Blanche Lincoln of Arkansas) said this is a top priority, and the president has made strong comments as well."

If the bill passes, it would undo years of work by Cantor and Trend, both of which recently earned permission from the Commodity Futures Trading Commission to exist as trading entities.

While Trend and Cantor still actively seek specific permission from the CFTC to trade boxoffice futures, the point would become moot by the passage of the financial reform bill, assuming the boxoffice language remains intact.

"It would ban movie futures," Friedlander said.

Lincoln added the boxoffice language into "The Wall Street Transparency and Accountability Act" last week in a section mostly dealing with the trading of onions futures.

"My bill would prohibit movie futures because these are purely speculative contracts," Lincoln told THR in an e-mail.

"Movie producers and others within the industry have found that these futures cannot be used effectively, creating an imbalance between hedging and speculation that could result in dysfunctional futures trading."