Film futures markets to launch soon

Wed Mar 10, 2010 9:21pm EST
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By Ann Saphir and Alex Dobuzinskis

BOCA RATON, Florida (Reuters) - If start-up Media Derivatives and broker dealer Cantor Fitzgerald have their way, investors may soon be able to place bets on the box office showing of summer blockbuster "Iron Man 2."

Media Derivatives, a division of Veriana Networks, and Cantor are racing to set up the first U.S. exchanges to offer futures on movie box office receipts.

Though the concept has been kicked around for a decade, both say they are closing in on their goal of offering hedging -- and speculation -- instruments to investors and movie studios wary of audience fickleness and box office volatility.

"It's the right place and right time to build an exchange," said Veriana CEO Robert Swagger. While other futures exchange start-ups have largely tried to wrest market share from existing exchanges, he said, Trend Exchange has a better chance of succeeding because it is an entirely new market.

The rush to offer futures could allow Hollywood studios to lessen the pain from a box office flop. The latest plans come as global box office rose to nearly $30 billion last year.

Hollywood studios often bring in partners to invest in their movies and minimize their risk. A futures market could give producers another measure of protection.

Media Derivatives' Trend Exchange, based in Scottsdale, Arizona, is slated to get the green light from the Commodity Futures Trading Commission on March 24, and plans to begin trading by midyear, Swagger said in an interview on Wednesday on the sidelines of the annual Futures Industry Association conference in Boca Raton, Florida.

Veriana plans to target institutional investors.   Continued...

<p>James Cameron, nominee for best director for "Avatar", arrives at the nominees luncheon for the 82nd annual Academy Awards in Beverly Hills, California February 15, 2010. REUTERS/Mario Anzuoni</p>