WHAT’S HAPPENED SO FAR?
Both Media Derivatives’ and Cantor Fitzgerald’s plans to set up exchanges to trade movie industry box office futures have been approved by the Commodities Future Trading Commission approved.
But that’s only for the technical backbone to allow trading and clear trades. Still to be approved are the details of exactly what the exchanges will trade and in what format. Media Derivatives hasn’t asked to trade any specific movie yet. Cantor has asked to trade Lion Gate’s “The Expendables.”
A decision on Media Derivatives’ request has to be made by June 8. A decision on Cantor’s has to be made by June 28.
Meanwhile, in Congress, a proposal to ban the CFTC from acting to approve the contracts is part of overall financial reform legislation the Senate is now considering – and Democrats and Republicans are debating. If the Senate passes a bill, that still must be combined with a version the House passed last year.
HOW WOULD THE CONTRACTS WORK?
Each company would work somewhat differently.
One big difference is that MD contracts would be for only the first weekend — defined as the movie’s opening on more than 600 screens through the Sunday of the first full weekend. Cantor’s proposal is for the first four weeks of wide release –the movie’s being on 650 screens. Cantor could eventually also trade films in limited release, based on 12 weeks of revenue.
MD’s contracts would launch a month before a movie opens; Cantor’s would launch six months before a movie opens.
Also: MD would offer both futures contracts and options, while Cantor would just offer futures contracts; MD is aimed more at brokers, while Cantor’s is aimed more at individual investors (At MD, the minimum contract would be $5,000; at Cantor, contracts could start as low as $50 and each represents a one millionth share of box office revenue).
MD’s box office revenues and Cantor’s are both based on Rentrak Theatrical data.
Media Derivatives Proposal