We've Got Hollywood Covered

What You Need to Know About Movie Futures Trading

Where it stands, how it works, what can and can’t trade


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.


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.

MD would start trading this fall. Cantor would expect to open trading within a week of trading approval.
MD would only trade movies going on at least 600 screens, but after that, its listing committee would look at the stars, the studio, the plot and story line, the genre, MPAA’s rating, possible awards, media buzz and the picture’s budget in determining exactly which major picture to offere. There would be no contract on a movie in limited release on less than 600 screens.
Cantor would initially offer all movies listed by Rentrak and expected to go into general release on 650 screens.
What happens if a movie is delayed, starts in limited distribution or gets pulled?
There is unlikely to be trading on MD’s exchange. At Cantor, though, a delayed movie would lead to an extension of trading — meaning it could trade for more than six months. Revenues for movies in wide release that start in limited distribution would be from the movie’s opening through four weeks of wide release.
Yes. The two exchanges will compete for traders.
Generally yes, but with some exceptions. Officials compiling box office data couldn’t trade on either exchange. Studio execs with inside information on release date changes, the number of screens films will go on or changes in advertising budgets couldn’t trade are barred from trading on Cantor’s exchange. CFTC could require additional restrictions.