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Monday, June 21, 2010


On Monday (6/14) the Commodities Futures Trading Commission (CFTC) announced it had approved the trading of futures and options contracts tied to the box-office revenue of movies.

Hollywood, including all the major studios, guilds, and the MPAA were vehemently opposed to the trading of these contracts stating that they could impair the performance of films as market traders began looking for ways to affect a movie's opening.

The derivatives would be traded on the MDEX Exchange, aimed at large and institutional investors. The contracts would begin trading four weeks before a movie opened and end trading as the film premiered on its opening weekend.

As of today, the battle continues as Senator Blanche Lincoln (D-Ark.) has sponsored a senate bill - the Wall Street Transparency Act - which would prohibit such futures trading. Backers of the trading argue that movie futures are a way to finance movies and to hedge the risk of movie financing.

I'll continue to follow this development and how it will impact or be used by exbibitors to hedge box-office revenues.

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