Provision passes by 13-8 vote
WASHINGTON — Dealing a potential blow to two proposals to create a market for film futures, the Senate Agriculture Committee Wednesday approved financial reform legislation that includes a provision that would bar trading related to a film’s box office performance.
The provision was part of the Wall Street Transparency and Accountability Act, introduced last week by Sen. Blanche Lincoln (D-Ark.), the chairwoman of the committee. She included the provision in the legislation following heavy lobbying in recent weeks by the Motion Picture Assn. of America and other industry groups. Lincoln’s bill, aimed at regulating Wall Street derivatives, was approved in a 13-8 vote, with Democrats joined by one Republican, Sen. Charles Grassley (R-Iowa).
Federal regulators approved the formation of the Cantor Exchange and the Trend Exchange in the past week, although they have yet to decide whether to approve the actual trading of the types of contracts tied to box office performance. The Commodity Futures Trading Commission has until June 7 to approve or reject the first of those contracts proposed by the Trend Exchange.
The Cantor Exchange, owned by Cantor Fitzgerald, and the Trend Exchange, owned by Media Derivatives, both declined comment on Wednesday’s vote. The MPAA applauded the action.
“We thank Chairman Lincoln and the committee for seeking to put an end to plans that would allow wagering on box office futures,” said Bob Pisano, the MPAA prexy and interim CEO. “We believe these plans are based on a faulty understanding of the film business and could cause real financial harm to both the film industry and other Americans drawn in by an online gaming platform that could be easily manipulated.”
The proposed ban on trading based on box office receipts was not even brought up by lawmakers before the vote on Wednesday, and that may be a hopeful sign for the provision’s prospects as the bill is combined with a larger financial reform package and makes its way to the Senate floor. There’s been some speculation that this could happen sometime this week, although it would still have to be combined with a House version of financial reform before it reaches President Obama’s desk.
The two B.O. exchanges have become engulfed in the overall issue of financial reform. Supporters of the idea of film futures trading note that it’s never been a question that they would face the same oversight and regulatory approval that lawmakers are now seeking for Wall Street derivatives.
Both exchanges will get the chance to make their case on today before a House Agriculture subcommittee, the first congressional forum on the exchanges.
Slated to testify before the Subcommittee on General Farm Commodities and Risk Management are Cantor Futures Exchange prexy Richard Jaycobs and Media Derivatives topper Robert Swagger. The two are expected to attempt to debunk the assertions that the exchanges will inflict financial harm on the film biz.