May 19, 2010
Predicting the success or failure of a futures contract is possibly more difficult than predicting whether or not a motion picture will be successful. Most new futures contracts fail - an estimated 70-80% cannot attract and sustain a profitable level of trading volume. Despite the fact that creating a successful and sustainable futures contract appears to be against all odds, exchanges are continually working to bring new products to the market in hopes of finding a successful contract.
Futures contracts based on box office receipts are new products. I applaud the new exchanges that have created these innovative products and look forward to hearing what they have to say, particularly how their contracts would be useful to the market and how they comply with the Commodity Exchange Act. I understand that box office contracts have also caused some in the motion picture industry to raise objections to their trading, noting that the contracts will not be useful and are susceptible to manipulation. I am very interested to hear the evidence that supports these assertions.
In determining whether to approve new contracts for trading, the Commission is bound by the rules and regulations set forth in the Commodity Exchange Act. Staff has worked very closely with all the interested parties regarding these contracts, and I await their recommendation on whether or not they should be approved for trading or violate the Act in some way. Until that time, I will keep an open mind on this subject and look forward to listening to today’s panelists. Thank you all for your participation.
Last Updated: June 14, 2010