TradeStation Securities, the US broker-dealer arm of Japanese financial services giant Monex Group, will go public through a merger with a blank-check firm in a deal that values the combined entity at $1.43 billion.
TradeStation is merging with a special-purpose acquisition company called Quantum FinTech Corporation, which will become a wholly-owned subsidiary of TradeStation.
The new company is expected to be listed on the New York Stock Exchange under a new ticker symbol, “TRDE”. The transaction will provide $316 million in cash, consisting of $201 million held in Quantum FinTech’s trust account, and $115 million of additional capital through a private sale of Quantum stock. This private investment includes $50 million from Monex and $50 million from crypto billionaire Michael Novogratz’s Galaxy Digital Holdings.
That capital will be put to work to speed up TradeStation’s account and revenue growth through marketing spending. The money will be also utilized in making new hires across product development and IT functions. It will accelerate the rollout of new product feature initiatives, and to add liquidity to support an anticipated larger customer base, the company said.
Tailor-made for crypto traders, TradeStation uses global integrations to create a wide pool of liquidity sources that enable better price discovery and transparency. The company also promotes its crypto desk as helping traders avoid lengthy transactions on traditional exchanges, as well as avoid fees charged by other platforms for instant large volume trades.
Speaking on the announcement, John Schaible, Chairman and CEO of Quantum FinTech, said:
“TradeStation owns its core trading platform technology, and it executes and clears its customer trades across all of the major asset classes it offers. This high level of control over both its technology and operations gives TradeStation valuable agility and flexibility in how it runs and grows its business, as well as the ability to scale efficiently. And, just as important, TradeStation has a seasoned and talented management team that is public-company ready and devotes significant focus and assigns a high priority to risk management, compliance, and financial and internal controls, which we deem an essential foundation for success, particularly when seeking to achieve accelerated account and revenue growth in a highly regulated environment.”
This is the latest example of online trading brokers catching the boom of special purpose acquisition companies (SPACs). The most notable example was eToro and US SPAC Fintech Acquisition in a deal that values the social investment platform at a massive $10.4 billion.
In essence, a SPAC is a shell company that lists on a stock exchange with the purpose of buying another business and taking it public without consuming the time, costs and regulatory oversight required for traditional IPOs.