Quantum FinTech (NYSE:QFTA) has entered into a definitive agreement to acquire AtlasClear, which is itself combining with correspondent clearing broker-dealer Wilson Davis & Co. and acquiring Commercial Bancorp of Wyoming.
The combined company is expected to trade on the NYSE under the symbol “ATCL” once the deal is completed in the second or third quarter of 2023.
Quick Takes: Considering the parties have yet to release any financial details into the transaction, we can skip right to the quick takes.
First off, any kind of deal announcement from Quantum FinTech comes as a surprise as there has been no official word that the SPAC had terminated its troubled combination with TradeStation.
That deal was announced over a year ago and appeared to run into extended regulatory scrutiny like other transactions with fintech companies providing retail investors access to crypto trading alongside securities.
On August 2, Quantum Fintech then outlined that TradeStation had attempted to terminate the transaction, citing that its terms included a termination date of August 1. Quantum FinTech rejected this, however, claiming that TradeStation did not have the right to terminate because it itself breached or failed to perform at least one provision of the merger agreement.
This standoff appeared to be headed towards litigation, but neither side has made any update on it since. Quantum Fintech’s last filings merely noted that its warrants were being delisted from the NYSE and it would be filing its 10-Q late.
One would presume that Quantum Fintech is not planning to both combine with TradeStation and also conduct this separate transaction, but, without any official announcement, the situation is unclear.
Things are not much clearer with the new transaction. AtlasClear’s website describes it as being “currently in formation while obtaining approval from the regulatory entities. Atlas Clear is seeking approval to operate as a carrying corresponding clearing broker dealer to service US and Latin American corporations and institutions.”
The broader Atlas Group has been in business in some form since 1994 when it developed and sold NexTrade to Citigroup (NYSE:C). It then developed Matchbookfx and a “bank for banks” called Anderen, which it sold to Valley National Bank. It has since been working to obtain a general banking license for its Panama-based Atlas Bank, which has been operating since 2017.
It worked to set up a forex trading business called Atlas FinTech, which first began operating in 2015. This is designed to form the foundation of Atlas Clear, which it aims to operate as a clearing broker deal. The website notes that it expected Atlas Clear to begin operating in the third quarter of 2018 and it is unclear if this space has been updated since about that time.
The answer to the banking license issue appears to be coming with its planned acquisition of the Commercial Bancorp of Wyoming, which is a federal reserve member and Wilson Davis & Co., a national securities clearing corporation.
Commercial Bancorp is the oldest appendage in this deal, beginning operations as Farmer’s State Bank in 1915. It appears to have operated as a single-branch private and corporate bank ever since, primarily serving the community of Pine Bluffs, Wyoming – population 1,129.
Wilson Davis & Co., meanwhile, has apparently been around since 1968 and now has 29 brokers listed on its website, offering services appearing to primarily target individual wealth management clients. Although it is headquartered in Salt Lake City, it has satellite offices in California, Arizona, Colorado, New York, New Jersey, and Florida.
All of that together could potentially make a bank, but still not a very large one by the looks of it. Nonetheless, the combined entity will be led by Wilson Davis CEO Robert McBey and Atlas FinTech Chief Business Development Officer Craig Ridenhour.
It appears that the Atlas Group have decided to use these acquisitions to replace the need for internally developing clearing and banking infrastructure to plug its proprietary forex trading platform into. The press releases notes that the final Atlas Clear entity “will provide specialized banking and clearing services to other financial services firms, with an emphasis on global markets currently underserviced by larger vendors.”
Unfortunately, we don’t have any of the agreements and associated documents on this deal filed as of yet, so it’s difficult to fill in the blanks. Perhaps we’ll know more in the next day or two.
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