MPAA warns on box-office trading: "The economic equivalent of legalized gambling" (NYT)

By Nancy Tartaglione

With both the Cantor Futures Exchange and Trend Exchange gearing up to allow folks to speculate on box-office, the MPAA has asked the Commodity Futures Trading Commission to prevent such a move. In a letter to the commission, interim chief executive of the MPAA, Bob Pisano, said that the "reputation and integrity of our industry could be tarnished by allowing trading in the movie futures contracts in a manner which allows them to be viewed as the economic equivalent of legalized gambling on movie receipts."

The commission has been reviewing applications from Cantor and Trend that, if approved, would see buyers and sellers on the markets placing money on whether a movie will sail or sink at the box-office.

Last week Cantor allowed customers to start funding their accounts. It expects to get final approval for the exchange in April.

Trend, The New York Times reports, had expected to get a ruling on its application by Wednesday.

Unlike Cantor, which will be open to everyone, Trend will work only with professional and institutional investors.

The commission is now accepting public comments on the application until April 8.

According to the NYT, Richard Jaycobs, the Cantor exchange's president, said Wednesday that its exchange would limit the amount a company invested in a movie could hedge on that film, along with other restrictions, but not prohibit it entirely.

Greg Frazier, the executive vice president of the MPAA, told the NYT that the group had started digging into the issue in recent weeks after reading news reports about the markets.