Will the CFTC allow the newly approved box office futures exchange to actually offer box office futures contracts?

Michael Giberson

As just noted, the CFTC has approved Media Derivatives request to establish Trend Exchange, a box office futures exchange.  At Midas Oracle, Chris Masse reacts to the news by drawing attention to remarks by CFTC commissioners suggesting that it may be difficult for Trend Exchange to gain the subsequent CFTC approvals needed for it to actually offer box office futures contracts.

From a Bloomberg story on the exchange approval:

The CFTC must still approve the type of contracts to be dealt before Trend Exchange can begin. The company has said its first product will center on opening-weekend box office.

Product approval is “a very different question” from exchange approval and raises “significant concerns,” Chilton said in an e-mailed statement. He said he had “reluctantly” concurred in today’s vote.

“We have serious concerns regarding the trading of media contracts and we support a very thorough review of all of these first-of-a-kind products,” CFTC Commissioner Scott O’Malia said in an e-mailed statement.

U.S. Senator Blanche Lincoln, an Arkansas Democrat, today added language banning trade in movie futures to a broader derivatives bill she is writing. Lincoln is chairman of the Agriculture Committee that oversees the commodity commission.

More information from the CFTC here, including links to the order and related.

While the CFTC’s inquiry regarding event contracts seems relevant here, I see no reference to that proceeding from 2008 in the CFTC order or concurring statements issued by commissioners.  Perhaps, too, that is a bad sign.


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