Anger over box-office futures
With futures trading encompassing everything from commodities to gold, it's the turn of Hollywood movies now to be traded in the futures market.
News reports suggest that the Commodity Futures Trading Commission (CFTC) in the United States has decided to allow a new company called MDEX to offer a futures contract based on box-office receipts of the forthcoming Hayden Christensen film Takers, which is due out in the US in August at the height of the summer blockbuster season.
According to news reports, trading would be based on the amount of money a movie takes in during its opening weekend.
For example, an investor thinks a movie will make at least US$75 million in its first weekend. The exchange finds an investor who thinks the movie will fall short of that mark and the two investors enter the contract together.
When the movie receipts come in, the one who is correct gets a percentage on top of his investment based on the odds received. The other investor loses his investment.
Obviously, Hollywood studios are not happy with this financial product and are making a last ditch appeal to Congress to halt the trading on ' box office futures'.
The Motion Picture Association of America (MPAA) has also reacted with horror to the news and is demanding that a ban be included in the Wall Street Reform Bill, which is being drafted on Capitol Hill and which could be signed into law next month.
'It is unfortunate that the CFTC has now given the go-ahead to a new gambling platform that could be plagued by financial irregularities and manipulation,' says MPAA's president Robert Pisano.
The new box-office contracts 'pose real possible economic damage to an industry that employs more than 2.4 million men and women, working in virtually every state in the country,' Pisano says.
