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Responding to proposed plans by the Cantor Futures Exchange and Trend Exchange to establish markets that would allow investors to trade on futures based on a film’s expected box-office takings, MPAA interim Chief Executive Officer Bob Pisano wrote in a letter to the Commodity Futures Trading Commission dated 23^rd March 2010 that the move would be the economic equivalent of ‘legalised gambling on movie receipts.’

The MPAA had many concerns over the proposed plan, chief of which was that the market could be abused by speculators with insider knowledge not available to the public.   ‘The reputation and integrity of our industry could be tarnished by allowing trading in the movie futures contracts,’ Pisano said in his letter.

Rob Swagger, CEO of The Trend Exchange, and Richard Jaycobs, president of the Cantor Futures Exchange, both sought to soothe any concerns the MPAA voiced over the proposed markets.   Jaycobs pointed out that both exchanges would be subject to the same regulations as other commodities markets, while Swagger argued that the Trend Exchange would only be open to institutional investors with a minimum investment of $5,000, thus minimising the risk of gambling.   Jaycobs also said that they had approached the MPAA to discuss their plans but had met with no response.  ‘We’re disappointed this arrives at the relatively late stage in the game that it has,’ he remarked.

Both exchanges argued that the market could be used as a tool by the studios to reduce the risk of investing in films.   “We don’t think it’s gambling,’ Jaycob said, ‘We can point to very specific trades and strategies that can be deployed that help film finance.’   In a press statement, Swagger said, ‘We are confident the issues raised by the trade organization are without foundation, but we are happy to readdress them with the CFTC.’

The Trend Exchange’s approval date was set for 24^th March, a date which they suggested postponing until 2^nd April to allow time for the MPAA’s concerns to be addressed.   The Cantor Exchange was due to receive notification from the commission on 20^th April.

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16/4/10: CTFC Approves Movie Futures Exchange