Media Derivatives Inc., one of two companies planning to sell futures contracts based on movie ticket sales, urged the U.S. Senate to reject attempts to outlaw the products.
Robert Swagger, chief executive officer of Media Derivatives Inc., asked senators to reject the Motion Picture Association of America’s stand and strip a proposed ban from Wall Street reform legislation, according to an e-mailed letter sent today.
Media Derivatives and Cantor Fitzgerald LP are seeking to create markets that would permit investors to trade futures based on estimated box-office receipts of a movie prior to its release. The Senate Agriculture Committee last week approved legislation that would ban the products as part of wider derivatives legislation.
“Banning a futures contract at the request of a special interest group like the MPAA sets a dangerous precedent,” Swagger said in the letter. “It undermines the role of existing regulators.”
The Commodity Futures Trading Commission has approved initial proposals from both Media Derivatives, part of Scottsdale, Arizona-based Veriana Ventures, and New York-based Cantor Fitzgerald’s Cantor Exchange unit. The companies must obtain separate approval for contracts before trading can begin, the commission has said.
The commission shouldn’t make a decision until Congress acts, 10 members of the U.S. House of Representatives said today in a letter to commission Chairman Gary Gensler.
The MPAA, the trade group for the six largest movie studios, has said in previous statements that film futures would be vulnerable to insider manipulation.
Regulations and oversight that govern other futures markets would protect investors, Richard Jaycobs, president of Cantor Exchange, said in an interview yesterday.
“The issues being raised by the MPAA can be dealt with because they’ve been dealt with in every other market,” Jaycobs said.
In addition to the studios, the contracts are opposed by the National Association of Theatre Owners and some Hollywood labor groups.
To contact the reporter on this story: Michael White in Los Angeles at firstname.lastname@example.org