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Cantor Fitzgerald, a leading Wall Street brokerage house which operates the fake futures exchange Hollywood Stock Exchange, now wants a real-life one. It’s seeking permission from U.S. regulators to set up a futures exchange to trade contracts on the expected weekend box office of major motion pictures. This is beyond ridiculous (and not just because it gives me nightmares that I’ll do DHD weekend box office and suddenly have to answer to the SEC). Here’s why: “This could lead to another source of revenue for studios who can make their own bets on movies they are releasing to increase total revenue take or hedge losses,” one financial source explained to me. “Who knows if it will take off but interesting nonetheless.” According to a company statement, Cantor Fitzgerald LP has asked the Commodity Futures Trading Commission to create this new exchange that plans to make domestic box office sales its first product traded on the Cantor Exchange in the First Quarter of 2009. Bloomberg reported that the contract is designed to let the film industry hedge and speculate on the theatrical performance of movies, and based on the first four weeks of a film’s release. Cantor’s Hollywood Stock Exchange is a virtual stock market that forecasts ticket sales and box office performance based on mock trading by users of the site.
For more estimates listed by title, see box office results here...Editor-in-Chief Nikki Finke - tip her here.
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How is this even remotely legal?
If a major studio, knowing it has a bomb on its hands, keeps that fact quiet and withholds the film from critics until opening day, AND hedges its risk on this new exchange by betting that competing films will do much better, then aren’t they engaging in unethical, maybe even criminal behavior?
Also, isn’t this a form of gambling? (Of course, isn’t all of Wall Street a casino? LOL)
Not a stock market expert but this sounds ridiculous.
Wow, let’s make up more convoluted investor instruments to sucker richies with.
I found out about this yesterday from a friend who was invited by HSX to be one of the “founders” of the new exchange (for some reason they’re looking for 300). Definitely an interesting idea, but I was unaware that the studios were going to be allowed to partake… I can already see the scandalous claims of insider trading…
Great!! After the destruction of the world economy based in no small part on ponzi schemes and other assorted pyramid scams and the shuffling of paper around by the totally useless and one could argue criminal class of speculators, let’s create a another way to make money on SPECULATION! Isn’t this biz inherently speculative enough for everyone?
You’re not supporting this are you Nikki?
Great, another source of risk for the studios to eventually abuse. This has “will lead to a funding crisis” written all over.
Awesome. This will be a fantastic way to make money for everyone involved. The studio execs who have the most up to date tracking info will profit the most and they can sell their info to outsiders who want inside scoop. You see greed really is good.
This is hilarious – I’ve been playing HSX for years, much to the chagrine of friends of mine who continually ask “are you making REAL money?”
Now maybe someday I will be!
That makes about as much sense as having your offices on the 105th Floor of Tower One.
Actually, notionally this is a great idea – imagine being able to hedge a $150mm bet (Speed Racer anyone?) by shorting or buying puts on the title, stars and director.
If used as a hedge in this way, this could have the odd effect of *raising* wages for the major players, at least in the short run, since it’d be easier to pay some shmuch A-lister $20mm if you could offset the risk partially on a real exchange.
I agree with the above comments however – we all know the players who get tracking data sooner rather than later. The opportunity for abuse with that data must be contended with, though I’m not sure there’s a way to practically eliminate it…
I have 186 million dollars on Hollywood Stock exchange. Can I transfer that over?
trading on that fake site is misleading their members. you’re not taking into account the mammoth size of the institutional trades and have no idea when they’ll buy or sell. this is a totally manipulative market venue, with only a few to truly profit, yes the exchange, making money on both sides of the contracts sales. cantor fitzgerald already backed out of the deal though the commodities futures trading commission approved it, (with three members posting objections). reason why? the financial reform, when it passes includes strict legislation about derivative trading. thank goodness.
tired of the taxpayer bailing out and paying for court costs. the insider trading would be ridiculous here, with disney’s secretary’s recent bust, just being the tip of the iceberg. her quarterly’s also included may 2010′s box office receipts figures!
problem here besides synthetic trading is derivatives fall under the commodities exchange where there’s no government clearing. all private clearing companies unlike wall street.
The SEC prohibits insider trading on any regulated exchange, thus preventing the studio’s from doing exactly as you suggest.
I played around on the HSX like 10 years ago when it was a game…like fantasy football only for people who like movies & TV.
No way in hell would I let any of my money be put into a real entertainment industry futures market though I don’t trust the execs to program a network or make movies that are worth watching anymore so what kind of messed up in the head would I be to invest (pronounce gamble) in this foolishness.
Colossally dumb idea.
The SEC prohibits insider trading on any regulated exchange, thus preventing the studio’s from doing exactly as you suggest.
Yes, the SEC prohibits it so NOBODY DOES IT.
Idiot.
This is a non-starter… Insider trading laws would prevent anyone that actually would want to hedge their risk from actually participating in this market.
@ HSX Player – just because it’s illegal doesn’t mean it doesn’t happen. In fact it happens all the time… don’t you remember what Martha Stewart got sent to the pokey for?
My biggest concern with this is that given how some movies are huge surprises or upsets (i.e. Speed Racer), people can potentially lose fortunes in this game… but then I realized, it’s exactly the same as in the NYSE or AMEX…
I personally think the idea is fine, it’s no different than buying regular stock or gambling. I just hope they come up with some strict regulation so that it doesn’t fall victim to the type of manipulation that fucked up the regular stock exchanges.
scams are us!
The studios will NEVER post their sure bets on these “stock markets”. Never in one million years will they sell stock in Batman 3, or Harry Potter 6,7,8, or anything on which they believe they will score big.
Only dogs will be posted for idiots to lose money on.
Right. Because Box Office is just so fricking predictable. Don’t worry, Nikki. I’m sure the SEC won’t have any time to come after you since it will probably be too busy with the likes of Ryan Kavanaugh.
Why would studios be banned from trading in this market?
For everybody’s information oil companies trade oil futures, grain farmers trade grain futures.
I’m assuming nobody on this board is a securities lawyer, but it seems to me (in the securities industry but not a lawyer) they should be able to.
Is it April 1st already?
While a great idea theoretically, it has major pitfalls in reality.
The biggest of which being the role of agencies in any futures market on Hollywood. The major agencies are privately held assets for a reason.
Combine the agency’s status as effectively market makers with their privately held status, and its a recipe for disaster.
But then this is assuming that this is some large scaled, public trading index and not a more restricted offering which would sidestep certain trading restrictions and some of the pitfalls – albeit not all that were brought up.
somebody please call in air-support . . . the inmates have finally taken over the asylum . . . and some of you are really taking this serious . . . why waste your money on this when you can still buy “sub-prime-bundled-credit-default-swaps????ENJOY!!!
GREAT IDEA!!! sorry nikki. Obviously the studios could not be involved. That would be insider trading.
I love it, love it, love it.
Thank you.
I think it’s a fantastic idea since the studios and agencies will abuse the system and try to game it. This will lead to a series of investigations, bringing sunshine into a lot of dark corners of Hollywood. Reporting 5-10% of a large, publicly traded company is one level of accountability but it’s nothing compared to the probes and inquests that the studios and agencies will face once they are directly subject to SEC oversight, and this is doubly true during an Obama Administration. In summary: this will keep me employed for a long, long time so I say bring on the ‘free’ market.
actually, the head of the motion pictures association of america is against this being passed, along with most of the industry.
The players for oil futures just had there wings clipped, makes me wonder if wallstreet is looking for fresh prey.
Is this a joke,
The studios are not listing the movies, CF is.
So the studios can’t withold their “top line movies” from the exchange.
Initially CF will be IPOing ONE movie a week, so I doubt CF will only be listing “dogs”. Can’t earn much commission if you trade what people won’t buy.
The IPO price will be established by bidding on the offered movie. If there’s not enough people to match up bids and takes, the movie won’t get traded or CF will establish an IPO price.
It is no different from any new stock on the NYSE or AMEX.
The prime difference is that on the NYSE and AMEX, insiders get rich on IPO’s since the brokers get first shot at IPO’s. On this exchange, it appears it will be compputerized trading, either eliminating brokers or limiting their ability to “sell” stocks. They would only be executing the trades which would be how they earn their commission. The same as the options exchange does now.
Like any IPO, there will be diamonds and duds but the difference is ANYONE can get a shot at the diamonds.
The 300 “founders” are the initial advisory committee that will help CF design the exchange. They don’t have to trade on the exchange if they don’t want to. They won’t be paying anything into the exchange, As HSX traders, they are invited because they are the ones who have been doing computerized trading in movies and stars for a long time and would have good ideas on how the exchange should operate.
The “insider trading” ravings of a number of posters is baloney. Since CF chooses what movies will be listed, hiding info about a dog film will not get it listed since who will establish an IPO price on movies that they know nothing about. That would be stupid and I really doubt people are going to bet their own money on movies they can’t get info about.
And yes, it is betting in the same way that buying GM or FORD is betting. Did GM tell its investors that it was on the verge of bankruptcy?
Lying about revenues is illegal and will earn the CEO of the studio a trip to prison. Don’t think so? Ask the CEO of a company I used to work for, Computer Associates. Sanjay Kumar earned a free vacation in federal prison of 12 years, a $2.2 million fine and $800 million restitution he has to pay for inflating earnings of CA in order to make the value of their stock rise so they could exercise their stock options and make millions. Google Sanjay’s name and read about what happens when you lie about earnings.