Wall Street Part II – coming to a futures exchange soon

The sequel to Wall Street, the 1987 film where Gordon Gekko declared that "greed is good", is due to be released this year. Titled Wall Street; Money Never Sleeps, this new Oliver Stone movie will again star Michael Douglas in the leading role.

Given real life events in the financial world over the past two years, it will be interesting so see whether Wall Street II grabs the attention of movie-goers in the same way the original did. After all, we've all become blase to genuine tales of billions being lost and fraud on an unimaginable scale. By the time of the sequel's theatrical release in September it should be possible to actually bet on its box office success.

Over the weekend it became clear that regulators at the Commodities and Futures Trading Commission (CFTC) are willing to give the go-head to allow the establishment of possibly two futures exchanges that will allow speculators to literally play the movies. Two firms – Cantor Fitzgerald and Veriana Networks – are vying to launch systems supposedly aimed at allowing movie financiers, producers and distributors to "hedge" their position on any particular movie.

The idea is to provide a risk management tool: if you have invested a large amount of money in a movie project, it should be useful to be able to bet against its success, so you recoup some of your losses in the event that the movie flops. Except, of course, that's not how the real world movie business works. Film finance is an emotional business, where the risks are huge and difficult to quantify.

The movie industry itself is appalled at the move. A whole range of Hollywood lobbyists and trade organisations came together recently and tried to block the movie futures plan, but to no avail. The industry, quite understandably, is worried that financial speculation on particular film titles will effect movie-goers decisions on what to go and see. Indeed, heavy betting against a particular film ahead of its release might lead to it not being distributed at all.

There's also the little matter of insider trading. You only have to watch the closing credits to a movie to realise that literally hundreds of people are involved in any given production. That means a lot of people in receipt of potentially price-sensitive information. And the movie industry really doesn't want the job of trying to police that. No matter. The CFTC has decided and the industry and the regulator will just have to find a way.

- The writer is associate editor of the Financial Times. The views expressed are his own

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