Two proposed exchanges that would allow investors to hedge the risk of the profitability of Hollywood movies have polarised the US film industry. One camp believes box office futures are a brilliant innovation and risk management tool – to the other, they are a recipe for financial trickery. Wyn Jenkins reports.
The attempt by two companies to set up exchanges listing futures on how well films perform at the US box office has blown up into an angry public argument, and is forcing US regulators to think hard about what sorts of uses derivatives can be put to.
On May 19, the Commodity Futures Trading Commission held a public meeting to hear both sides of the argument, and help it in its deliberation over whether to permit such contracts.
The regulator has already approved the formation of two film futures exchanges: the Media Derivatives Exchange on April 16 and the Cantor...