Today the Commodity Futures Trading Commission is expected to rule on whether to approve or deny an effort to create an exchange that will trade in film futures — to the great opposition of the studios.
On Thursday, Robert Pisano, the interim CEO of the Motion Picture Assn. of America, met with Gary Gensler, the chairman of the CFTC, to once again press the case that the plans to create the Trend Exchange really amounts to a form of gambling.
But the industry also has two new powerful allies in its effort to put a stop to the idea of trading on box office futures: Patrick Leahy (D-Vt.), chairman of the Senate Judiciary Committee, and Orrin Hatch (R-Utah), fellow member. They sent a joint letter to Gensler on Thursday, calling the idea “unprecedented” and arguing that it creates “perverse incentives for movie failure that may undermine the integrity of the industry.”
They also tied the pending decision to the recent financial crisis, writing that “movie futures contracts appear to constitute a platform for betting and speculation that is even more risky and manipulative than the typical financial product.”
Pisano, who attended the meeting along with other MPAA reps, followed up with another letter to Gensler, arguing that the commission had the authority to block the exchange. He cited the proposed exchange’s ability to obtain pricing information as one example. The exchange “states that its ability to prevent manipulation will be based on the requirement that studios disclose their proprietary information regarding box office receipts where the exchange believes such information is necessary to investigate or deter manipulation; however it has no authority to compel the motion picture industry or other private institutions to disclose any proprietary information,” Pisano writes.