North American Derivatives Exchange

http://demo.nadex.com/

Thanks to our reader AE for the tip.

Thanks to our reader AE for the tip.

From Deep Throat, we learned that Russell Andersson was laid off by HedgeStreet at the beginning of the Summer 2007. If so, why is it that Russell Andersson’s profile at LinkedIn states that he is still “currently” holding a position as a HedgeStreet VP?

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Reality Check:

- The “management team” page of the HedgeStreet website lists Yossi Beinart (President and CEO), Peter C. Lee (COO), and Timothy McDermott (General Counsel).

- The “board of directors” page of the HedgeStreet website lists Yossi Beinart (President and CEO), Peter Hetherington (Director) and Andrew MacKay (Director).

There is no mention of Russell Andersson as “VP Instrument Origination”.

1. Is Russell Andersson still working for HedgeStreet as a VP? In that case, why is it that HedgeStreet’s website is not accurate?
2. Was he told in 2007 by IG Group (the new owner) that his services were no longer needed? In that case, why can’t Russell Andersson update his LinkedIn profile? Additionally, in the case Russell Andersson was given the boot, would that mean that Russell Andersson has a large responsibility in the catastrophic failure of the pre-IG Group HedgeStreet?

Update

- Initial Jobless Claims

- European Central Bank Rate Announcements

- Nonfarm Payrolls

- Unemployment Rate

HedgeStreet

I think the CFTC is likely to define a set of limits which, if followed, will subject a prediction [exchange] to CFTC regulation which will hopefully be lighter than their regulation of HedgeStreet (which essentially was so heavy-handed it killed the firm). And this help protect prediction markets from the state gambling regulators.

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Yes, but TradeSports and BetFair would be excluded from this CFTC regulation, alas. And there is no way a prediction exchange can be profitable without sports.

P.S. I was interviewed for The Analyst, too. Those Indian journalists are very nice people. After that publication, I received many friend requests on LinkedIn from Indian business people.

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Inkling Markets, HubDub and AskMarkets have been techcrunched —that has not been the case for HedgeStreet or the Cantor Exchange. Practically, that means a great injection of PageRank, hundreds if not thousands of bookmarks, and plenty of new users. That’s not what I call being “overshadowed”.

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http://www.cantorexchange.com/ — A twin site of the Hollywood Stock Exchange.

Here are my early thoughts about the “Cantor Exchange”. I regret to say that their “Cantor Exchange” website does not seem very usable. (I hope it is not a bad omen.) It is impossible for me to copy their explanations posted on their webpages (other than the 2 press releases) and to republish that material in this post.

The second thought that comes to my mind is that their offerings are not standardized (their event derivatives are described in HSX lingo), and I wonder whether the real-money traders, who are accustomed to dealing with the CME, the NYSE, or InTrade, but who are not familiar with HSX, will make the effort to adapt. We will see. (I don’t think that the HSX play-money traders will go speculating on this real-money prediction exchange.) The collateral question is, why would the Cantor Exchange (a brand-new exchange with not a single trader, as of today) be better positioned to organize event derivative markets on movie business than, say, HedgeStreet, InTrade, BetFair, or even the CME? Obviously, Cantor Fitzgerald (a bond broker) are thinking that they can leverage their Wall Street clientèle and the HSX population to branch out and start up a brand-new, CFTC-regulated, real-money prediction exchange. It’s quite a big bet. I say “branch out” because starting off a real-money prediction exchange (Cantor Exchange) is quite different than running a play-money prediction exchange (HSX). Just look at how difficult it has been for HedgeStreet, which started off in 2004, and escaped bankruptcy in 2007 thanks to their rescue by IG Index. After 4 years, HedgeStreet is still not profitable, and it will probably take more years before it turns the first profit. Let’s wish a better future for Cantor Exchange.

I will update this present post, later on, linking to the reactions from the media and the blogs. (Cantor will be holding a conf call this Tuesday, so some media coverage will pop up over the next days.)

Here is a Financial Times news article, which won’t tell you much more than the 2 press releases re-published below.

Here’s Variety.

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Press releases:

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CANTOR ENTERTAINMENT TO ANNOUNCE MOVIE BOX OFFICE CONTRACTS

TO MOTION PICTURE INDUSTRY AND INVESTOR COMMUNITY

Cantor Fitzgerald Files Application for Domestic Box Office Receipt Contracts

Los Angeles, CA; New York, NY – (December 8, 2008) – Cantor Entertainment, which provides various services to the entertainment industry and owns the Hollywood Stock Exchange, is pleased to announce that Domestic Box Office Receipt contracts will soon be available to the motion picture industry and investor community. Cantor Fitzgerald, its parent company, announced earlier today that it has filed an application to launch the Cantor Exchange, whose first listed product will be Domestic Box Office Receipt contracts.

Domestic Box Office Receipt contracts will offer film finance professionals and traders a new opportunity to hedge and speculate on the theatrical performance of wide-release Hollywood movies. Domestic Box Office Receipt contracts will be a next generation film-financing tool that allows market participants to hedge risk and provides them profit opportunities based on the first four weeks of a film’s box office revenues.

“It’s clear from our conversations within the industry and investment community that there is a tremendous opportunity to introduce this exciting new tool to complement existing film financing alternatives. The market for Domestic Box Office Receipt contracts offers the motion picture industry, investment funds, banks and all other prospective investors a federally regulated trading exchange dedicated to the entertainment industry,” said Andrew L. Wing, President and Chief Executive Officer of Cantor Entertainment. “Our involvement in Domestic Box Office Receipt contracts reflects our continuing commitment to expand Cantor Entertainment’s numerous services in the entertainment industry.” The first Domestic Box Office Receipt contract is expected to be listed on the Cantor Exchange in the first quarter of 2009. Cantor Exchange is subject to final approval by the Commodity Futures Trading Commission (“CFTC”).

About Cantor Entertainment
Cantor Entertainment, a division of Cantor Fitzgerald, L.P., provides services to the entertainment industry. Cantor Entertainment also owns the Hollywood Stock Exchange (www.HSX.com), the world’s leading virtual entertainment stock market.

About Cantor Fitzgerald, L.P.
Cantor Fitzgerald is a leading global financial services firm. The Cantor Fitzgerald franchise includes institutional equity and debt sales and trading, investment banking, private equity, as well as other businesses and ventures. For over 60 years, Cantor Fitzgerald, a proven and resilient leader, has been committed to delivering a unique brand of unparalleled product expertise, innovative technology and customer service to its clients around the world. For more information, please visit www.cantor.com.

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Cantor Fitzgerald Announces Application for Cantor Exchange

Domestic Box Office Receipt Contracts are Expected to be First Contract Market

A New Tool in Film Finance

NEW YORK–(BUSINESS WIRE)– Cantor Fitzgerald, L.P., a leading global financial services firm, announced today that it has filed an application with the Commodity Futures Trading Commission (“CFTC”) to launch the Cantor Exchange. Cantor Exchange intends to list Domestic Box Office Receipt contracts as the exchange’s first traded product.

“The Cantor Exchange and our intention to list Domestic Box Office Receipt contracts reflect our continuing commitment to innovation in the finance and entertainment sectors,” said Howard W. Lutnick, Chairman and Chief Executive Officer of Cantor Fitzgerald.

Subject to final regulatory approval of the Cantor Exchange application, Domestic Box Office Receipt contracts will offer film finance professionals and traders a new opportunity to hedge and speculate on the theatrical performance (ticket sales) of major film titles. Domestic Box Office Receipt contracts will be a next generation financial management tool that allows film professionals to hedge risk and provides speculative opportunities to other market participants based on the first four weeks of a film’s box office performance.

The first Domestic Box Office Receipt contract is expected to be listed on the Cantor Exchange in the first quarter of 2009, subject to final approval of the Cantor Exchange application by the CFTC.

About Cantor Exchange

Cantor Exchange is launching the first trading platform based on movie box office revenue, and expects to begin listing Domestic Box Office Receipt contracts in the first quarter of 2009, subject to final regulatory approval. Cantor Exchange is a division of Cantor Fitzgerald, L.P., one of the world’s leading financial services firms, and is partnered with Cantor Entertainment, another subsidiary of Cantor Fitzgerald, which provides services to the entertainment industry and owns the Hollywood Stock Exchange® (www.HSX.com), the world’s leading virtual entertainment stock market.

About Cantor Fitzgerald, L.P.

Cantor Fitzgerald is a leading global financial services firm. The Cantor Fitzgerald franchise includes institutional equity and debt sales and trading, investment banking, private equity, as well as other businesses and ventures. For over 60 years, Cantor Fitzgerald, a proven and resilient leader, has been committed to delivering a unique brand of unparalleled product expertise, innovative technology and customer service to its clients around the world. For more information, please visit www.cantor.com.

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UPDATES WILL BE POSTED BELOW, LATER TODAY (AND DURING THE NEXT DAYS)…

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[T]he initiative is not for an application for a product extension of HSX. Rather it is an application for the launching of a new futures market, the Cantor Exchange, which will list Domestic Box Office Receipt Contracts. The contracts will also be known as Movie Box Office Contracts.

There are some similarities with HSX in that Movie Box Office Contracts are modeled on the MovieStock methodology of our site. For example, the contracts will be based on four weeks of a film’s domestic box office revenue. The regulatory approval process is inherently uncertain, so it’s a bit premature to say we are moving into real-money film trading markets just yet, but that is our intent.

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That is from Alex Costakis, MD of HSX.

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Here’s the Cantor Exchange project leader: Richard Jaycobs.

He seems to be a man open to suggestions.

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CNBC on Cantor Exchange — Via Jason Ruspini

Fox Business on Cantor Exchange –

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Financial Times:

All eyes on Hollywood futures

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Previously: Should the Hollywood Stock Exchange become a real-money betting exchange? – 2007-10-04

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