Quantum FinTech (QFTA) will be combined with AtlasClear- SPACInsider

Quantum FinTech (NYSE:QFTA) has entered into a definitive agreement to acquire AtlasClear, which itself combines with correspondent clearing broker-dealer Wilson Davis & Co. and acquires 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.

Fast takes: Considering that the parties have yet to release any financial details of the transaction, we can jump right to the quick actions.

First, any sort of deal announcement from Quantum FinTech comes as a surprise as there has been no official word that the SPAC had ended its troubled combination with TradeStation.

This deal was announced over a year ago and appeared to face extended regulatory scrutiny like other transactions with fintech companies that give retail investors access to crypto trading alongside securities.

On August 2, Quantum Fintech then outlined that TradeStation had sought to terminate the transaction, citing that the terms included an August 1 termination date. However, Quantum FinTech rejected this, arguing that TradeStation had no right to terminate the transaction because it itself breached or failed to fulfill at least one provision of the merger agreement.

This conflict appeared to be headed for litigation, but neither side has made any update on that page. Quantum Fintech’s most recent filings noted only that the warrants were delisted from the NYSE and that it would file its 10-Q late.

One would assume that Quantum Fintech does not plan to both combine with TradeStation and also complete 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 “currently in shape while they seek approval from regulatory entities. Atlas Clear is seeking approval to operate as a corresponding clearing broker-dealer to serve US and Latin American companies and institutions.”

The broader Atlas Group has been in business in one form or another since 1994 when it developed and sold NexTrade to Citigroup (NYSE:C). They then developed Matchbookfx and a “bank for banks” called Anderen, which it sold to Valley National Bank. It has since worked to obtain a general banking license for its Panama-based Atlas Bank, which has been operating since 2017.

It worked to set up a foreign exchange trading business called Atlas FinTech, which only began operating in 2015. This is designed to form the basis of Atlas Clear, which it aims to operate as a clearing broker deal. The site notes that Atlas Clear was expected to begin operations in the third quarter of 2018, and it is unclear if this space has been updated since around that time.

The answer to the banking license question appears to come with the planned acquisition of Federal Reserve member Commercial Bancorp of Wyoming and Wilson Davis & Co., a national securities clearing company.

Commercial Bancorp is the oldest affiliate of this agreement, beginning business as Farmer’s State Bank in 1915. It appears to have operated as a single branch private and business bank since then, primarily serving the community of Pine Bluffs, Wyoming – population of 1129.

Wilson Davis & Co., meanwhile, has apparently been around since 1968 and now has 29 brokers listed on its website, offering services primarily aimed at individual wealth management clients. Although headquartered in Salt Lake City, it has satellite offices in California, Arizona, Colorado, New York, New Jersey and Florida.

All this together could potentially make a bank, but still not a very big one as it stands. 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 has decided to use these acquisitions to replace the need for in-house development of clearing and banking infrastructure to plug its proprietary forex trading platform into. The press releases note that the final Atlas Clear entity “will offer specialized banking and clearing services to other financial services firms, with an emphasis on global markets not currently served by major providers.”

Unfortunately, we have not submitted any of the agreements and associated documents for this agreement yet, so it is difficult to fill in the blanks. Maybe we’ll know more in the next day or two.