"As CME closes its trading pits, what's a seat worth?"

I don't know what a seat is "worth" but at this instant the stock is "worth" $94.82 up 20 cents, putting this Jan. 8 post, "Equity Idea: Trading CME Common, Redux (CME)" in the okey dokey column. (again)*

From Crain's Chicago Business:

CME Group may be closing more than half its trading pits in Chicago and New York, but the value of a "seat" at its main exchange is near its highest level in five years.

A seat-holder is a member of one of CME's exchanges, such as the Chicago Board of Trade or the Chicago Mercantile Exchange, and that membership gives traders access to the trading floor. But it also provides discounts on CME trading and clearing services (in which CME acts as a kind of guarantor of the trade).

Following Chicago-based CME's announcement last week that it will close most of its futures contract trading pits in July, leaving open its options contract pits, some traders feared the value of the seats would drop as owners unloaded them. So far, that hasn't happened because the value of a seat today mainly reflects CME's overall trading volume, and that's been booming thanks to rising electronic trading.

“Now is a time when it's natural to think there's going to be pressure on those seats, and there probably is and you wait that out,” said Tom Bentley, who owns a CME seat and has been a trader on the floor in the cattle pit for some 30 years. “There's no reason to panic.”

STILL VALUABLE
CME, which operates the biggest future market in the world, is one of the only major exchange owners that still operates trading floors, though the New York Stock Exchange and Chicago Board Options Exchange also have them. After CME demutualized its member-owned organization and sold stock to the public in 2002, the company moved further away from the concept of seat-holders as owner-members.

Still, as testament to the enduring value of the seat, one seat sold for $720,000 on Feb. 6, two days after Chicago-based CME announced it would close the pits. That was down from a five-year high of $850,000 paid for a seat in December, but it was still higher than a $350,000 transaction in May 2013....MORE

*Long time readers know we don't post many individual stock touts on the blog, preferring instead the sweeping generalities afforded by major asset classes. CME was an exception that worked out and should work out again....