The Trend Exchange

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The Trend Exchange
TrendEx.jpg
Founded 2004
Headquarters Scottsdale, AZ
Key People Robert Swagger, CEO

The Trend Exchange (TrendEx) is a media-related futures exchange owned by Media Derivatives Inc., which is privately funded by Veriana Networks. It will allow institutional investors to hedge investments in motion pictures. The exchange received regulatory approval from the Commodity Futures Trading Commission (CFTC) on April 16, 2010 as a designated contract market and is expected to launch in the third quarter of 2010.[1]

On June 14, the Commodity Futures Trading Commission approved the first futures contract based on a box office receipts. The Trend Exchange plans to launch a contract based on the movie 'Takers', which opens on August 20, 2010. [2]

History

The Motion Picture Association of America (MPAA) and the Directors Guild of America have stated that movie derivatives could undermine their business. They fear the exchange will spawn insider trading and speculation and, have launched a heated effort against the venture in the weeks leading up to the CFTC approval.

While the CFTC has given regulatory approval, they are reluctant about the actual contracts and how they would impact movie performances. CFTC Commissioner Bart Chilton believes this is a novel approach to hedging risk in Hollywood but has significant concerns about price manipulation and fraud. [3] During the June 14 debate, CFTC Commissioner Chilton and Commissioner Jill Sommers voted against the Exchange. [4]

Products and Services

TrendEx is developing a variety of products that will benefit the entertainment industry by helping mitigate risk. They will launch futures contracts based on opening weekend box office receipts designed for institutional traders and commercial users. Producing major motion pictures costs on average around $107 million per movie and production companies, historically, have not had an effective way to minimize risk.

The contracts will be based on movies that have an MPAA rating and are showing in at least 600 domestic theaters. They will be listed no more than 30 days before the movie's release date and end the day before the movie opens. [5]

Key People

References

  1. The Trend Exchange® Receives Regulatory Approval. PR Inside.com.
  2. US regulator okays first movie futures contract. Yahoo.
  3. CFTC Commissioner Bart Chilton on the Trend Exchange and the Cantor Exchange’s movie box-office prediction markets (YouTube). Bloomberg.
  4. US regulator okays first movie futures contract. Yahoo.
  5. ‘Iron Man’ Bets Loom as CFTC Staff Backs Film Futures. Bloomberg.