Hammering back against a strong tide of Hollywood and legislative opposition, the head of a derivatives company looking to establish a box-office futures exchange on Wednesday write a letter to the Senate asking it remove a ban on such trading from the Wall Street Transparency and Accountability Act of 2010.
“We respectfully urge you to remove this harmful language from the bill as it is a contradiction to the current initiative for market transparency,” wrote Robert Swagger, CEO of Media Derivatives, one of two companies looking to establish futures markets tied to domestic box-office performance.
Noting that Congress hasn’t intervened in a futures market since 1958 (when onion futures were briefly prohibited), Swagger called the ban “piecemeal.”
The ban was added to the Senate’s far-reaching financial reform bill after Media Derivatives and Cantor Fitzgerald, the other company looking to establish a movie-futures market, obtained permission from the Commodities Futures Trading Commission to establish exchanges that trade on box-office performance.
“Banning a futures contract at the request of a powerful special interest group like the MPAA sets a dangerous legislative precedent,” Swaggert wrote. “It undermines the role of existing regulators, and sets up a case that any time a new contract is developed, opponents will run to Congress and a decision is made to either accept or deny the request of special interests solely for political reasons.”
However, no sooner was Swagger’s letter publicized when word came that 10 more members of the House of Representatives had sent a joint letter to Gary Gensler, chairman of the CFTC, asking him to deny regulatory approval for Media Derivatives and Cantor Fitzgerald.
Both companies still need CFTC approval on the actual contracts that will trade on these exchanges.