Hollywood stock exchange, movie-stocks & star-bonds

Metro India News | Hyderabad 

Hollywood Stock Exchange (HSX) turned 30 years old. Until now 40,000 movies got listed. Every year 1,000 to 1,500 new movies get listed and traded in Hollywood Dollars (H$). $H1 equals $1 million in terms of box-office returns. Daily an average of 60 million shares trade and the total annual trading volume is H$2 trillion. HSX has more than 1.6 million traders whereas unique investors on New York Stock Exchange are 110 million and NSE in India has 140 million.  

HSX allows traders to buy, sell, and short-sell movies with MovieStocks, and celebrity-stars with StarBonds. HSX also has derivatives for events like Oscars to predict winners before stage announcements. Hollywood studios, research firms, media, critics, and public observe to gauge public anticipation and response to track a movie or a star. The HSX trading influences actual values and volumes of film distributions and star brand endorsements.

As HSX saw more Indian movies listing, it launched Bollywood Stock Exchange (BSX) in early 2000. This is the only international submarket in HSX. Until now, 1,000 Indian Movie-Stocks got listed. Bahubali, RRR, Pushpa, Devara, and Dhurandhar saw more trade volumes. The current active MovieStocks are King (Hindi), Varanasi (Telugu), and Fauzi (Telugu). From India, only Deepika Padukone, Priyanka Chopra, Alia Bhat, and Prabhas have StarBond listings.

Listing on HSX is done systematically. Once a new movie plan is announced with a popular combination, HSX opens IPO for that movie and issues virtual MovieStocks.

Traders build their wealth on HSX by buying low and selling high or shorting based on their expectations, news, and box office results. Hollywood Reserve Bank (HRB) regulates the issuance, collection, and settlement of H$. Unlike in equity stock exchanges, in HSX every trade gets executed through Virtual Specialist which is an automated server program. The Virtual Specialist adjusts prices as per buying and selling pressures. Due to this, no bid-ask matching is required since every trader trades directly with the exchange and price manipulation is difficult.

HSX planned to convert into a real-money exchange for movies, stars, and the like, which was also its original idea. Hollywood explained that real-money trading of movies is legalizing the gambling. It succeeded to get future contracts on movie box office revenues banned through Dodd-Frank Act 2010. Traders trade for knowledge, skill, and entertainment. Film players track the data to know indications which are like grey market for pre-IPOs.

HSX makes its money from advertisements and by selling research data. Stars track the trading data to know real feedback. B-School students have been trading to gain exposure to shorting, portfolio balancing, and market psychology. Long standing traders holding up to $50 billion can artificially influence prices of MovieStocks and can earn real money outside HSX. Betting on movies is illegal, but it is an open secret that huge volumes of betting take place on popular movies both in Hollywood and Bollywood.

Picking up positive aspect, regulators should explore Virtual Specialist for real life SME equity exchanges to enhance liquidity to investors. HSX should prosper for sharing views, real-time information, feedback, and entertainment but scope for undue gambling should be curtailed.

(Dr. Kishore Nuthalapati is CFO of BEKEM Infra Projects Pvt Ltd)