Pisano criticizes 'legalized gambling' proposals by Trend, Cantor
The MPAA has expressed its opposition to two proposals to start movie futures trading, calling it “unbridled gambling” and warning that the markets “may be inherently vulnerable to price manipulation.”
Two firms, the Trend Exchange and the Cantor Exchange, are seeking to give industry observers the opportunity to buy into the performance of films over their first four weeks at the megaplex, a prospect that has triggered consternation in studio circles.
In a letter to the Commodity Futures Trading Commission, the MPAA’s interim CEO, Bob Pisano, said the prospects of such trading “raise important public policy issues.”
“In our view and based on the materials in the public record, the reputation and integrity of our industry could be tarnished by allowing trading in movie futures contracts in a manner which allows them to be viewed as the economic equivalent of legalized gambling on movie receipts. We can see no public purpose in allowing these contracts to be the subject of interstate commerce.”
Pisano also noted that it will be “virtually impossible” to enforce compliance with insider trading concerns, noting the breadth of parties who are involved in a film’s release.
The Trend Exchange, from Media Derivatives Inc. in Scottsdale, Arizona, released a statement in which its CEO, Robert Swagger, called Pisano’s concerns “without foundation” and said that it meets “all requirements of the law and social responsibility.” But they have agreed to a delay in regulatory approval after the CFTC received the letter. The Cantor Exchange, a subsidiary of Cantor Fitzgerald, anticipates final approval by April 20.Greg Frazier, MPAA’s exec VP, issued a statement in which he said, “Anyone who has followed the meltdown of the financial markets, and the pain this caused people throughout America, knows how important it is to ensure that the establishment of new financial marketplaces does not open the door to rampant speculation and financial irresponsibility.”