Box office futures trading in America is dead. I took the position early that box office derivatives trading should be outlawed in the U.S. given the current history of market manipulation and insider trading abuses that have accelerated since the passage of the Commodity Futures Modernizatin Act (CFMA) in 2000 that gave Wall St. new ways to stack the Ponzi scheme deck higher and fraud quotient fatter (predictably, we had the epic crash of derivatives in 2008 as a result).
Some people were surprised by my opposition since I was the originator of the concept back in 1996 when I co-founded the Hollywood Stock Exchange -- the technology and intellectual property forming the backbone of Cantor Fitzgerald's Cantor Exchange -- that they inherited when they took control of HSX in 2001.
For a while, it looked like box office futures might go through. Cantor got CFTC approval to launch, but Blanche Lincoln and the MPAA stopped it from happening for the the obvious conflict of interest problems that would occur when movie studios start trading on their own output using insider information.
Combining the fraud of Wall St. with the hype of Hollywood was always going to be a dangerous mix that could destroy yet another American industry.
But looking at the global picture. I am of the opinion that box office futures trading could work -- if it were hosted in a country outside of the U.S. and far away from the sharks in LA.
China, India and Iran are interesting choices but I think the most likely candidate could be Russia.
What the global film industry needs right now is some competition. Hollywood itself has become mired in its own derivatives swamp; Toy Story 3, Shrek 4, and the upcoming Indiana Jones 5 are all retreads that are about as much fun to watch as opening up your monthly brokerage statement and finding your collateralized, resecuritized, hybrid, credit default swaps are now trading for zero.
How to inject life back into the film industry:
If Russia were to launch a multi-hundred billion dollar box office futures market, opportunities would immediately open up for popular culture to change in ways that would decapitalize the tired Hollywood formula, while simultaneously creating momentum for projects that incorporated views from the mid-east and far east; with Russia acting as a geographic and intellectual bridge between East and West.
Global popular culture needs to move its center of gravity away from California. Having a box office futures market in Moscow could be just the ticket.
The result would be a more well-balanced global cinema market driven less by Hollywood sequels and more by a genuine global pop culture zeitgeist of community and entertainment.
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