As filed with the Securities and Exchange Commission on July 1, 2022.

Registration No. 333-261885​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 2
to

FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

TradeStation Group, Inc.

(Exact Name of Registrant as Specified in its Charter)

Florida (State or Other Jurisdiction of
Incorporation or Organization) 6211 (Primary Standard Industrial
Classification Code Number) 8050 SW 10th Street
Plantation, FL 33324
(954) 652-7000 65-0977576 (I.R.S. Employer
Identification Number)

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Corporate Creations Network Inc.
801 US Highway 1
North Palm Beach, Florida 33408
(561) 694-8107

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Roxane F. Reardon
Michael Wolfson
Ravi Purushotham
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Tel: +1 (212) 455-2000 Carol Anne Huff
Jason D. Osborn
Winston & Strawn LLP
35 W. Wacker Drive
Chicago, Illinois 60601
Tel: +1 (312) 558-5600

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effective date of this registration statement and all other conditions to the proposed Merger described herein have been satisfied or waived.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☐
​	Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this proxy statement/prospectus is not complete and may be changed. TradeStation may not issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JULY 1, 2022

PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
OF
QUANTUM FINTECH ACQUISITION CORPORATION

AND

PROSPECTUS FOR UP TO 24,295,696 SHARES OF COMMON STOCK, 26,278,125 WARRANTS,
AND 22,259,188 SHARES OF COMMON STOCK UNDERLYING WARRANTS
OF
TRADESTATION GROUP, INC.

Dear Quantum FinTech Acquisition Corporation Stockholders:

On behalf of the board of directors (the “Quantum Board”) of Quantum FinTech Acquisition Corporation, a Delaware corporation (“Quantum,”), Quantum cordially invites you to attend a virtual special meeting (the “Special Meeting”) of Quantum stockholders, to be held via live webcast at        (New York City time) on          , 2022. The Special Meeting can be accessed by visiting https://​       , where you will be able to listen to the meeting live and vote during the meeting. Please note that you will only be able to access the Special Meeting by means of remote communication.

On November 4, 2021, Quantum, TradeStation Group, Inc., a Florida corporation (“TradeStation”), and TSG Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of TradeStation (“Merger Sub”), entered into an Agreement and Plan of Merger (as amended by the First Amendment to the Agreement and Plan of Merger dated December 17, 2021 and the Second Amendment to the Agreement and Plan of Merger dated April 28, 2022 and as it may be further amended or restated from time to time, the “Merger Agreement”) providing for, upon the terms and subject to the conditions thereof, a business combination between Quantum and TradeStation, pursuant to which, among other things, Merger Sub will merge with and into Quantum at the Effective Time (as defined in the Merger Agreement), with Quantum continuing as the surviving corporation and a wholly owned subsidiary of TradeStation (the “Merger”). A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus. The Merger and the other transactions contemplated by the Merger Agreement are referred to herein as the “Business Combination.”

Contemporaneously with the execution of the Merger Agreement, certain investors (the “PIPE Investors”) entered into subscription agreements (the “Subscription Agreements”) with Quantum, pursuant to which the PIPE Investors have committed to purchase an aggregate of 12,500,000 shares of common stock of Quantum (the “Quantum Shares”) at a purchase price of $10.00 per share. Each PIPE Investor (other than Monex Group, Inc. (“Monex”), the sole stockholder of TradeStation) whose aggregate subscription amount equals or exceeds $5.0 million will receive additional Quantum Shares equal to 10% of the PIPE Investor’s subscription amount, resulting in the issuance of an aggregate of 750,000 additional Quantum Shares for no additional consideration (such additional Quantum Shares, the “Incentive Shares”), for an aggregate of 13,250,000 Quantum Shares (such 13,250,000 shares, the “PIPE Shares” and such transaction, the “PIPE Investment”). The PIPE Shares include (a) an aggregate of 5,000,000 Quantum Shares to be issued to Monex, for an aggregate purchase price of $50 million, (b) an aggregate of 7,500,000 Quantum Shares to be issued to the PIPE Investors (other than Monex) for an aggregate purchase price of $75 million and (c) the Incentive Shares. The PIPE Investment is conditioned upon the consummation of the Business Combination, and will be consummated immediately prior to the closing of the Business Combination (the “Closing”). The PIPE Shares will be converted in the Merger into an equal number of shares of common stock of TradeStation (the “TradeStation Shares”). In addition, the Subscription Agreements provide for the potential issuance of up to 4,038,462 additional TradeStation Shares (“Additional Shares”) that the PIPE Investors (other than Monex) may be entitled to after the Closing based on the trading price of TradeStation Shares during the relevant measurement period.

The Merger Agreement provides that, upon the terms and subject to the conditions thereof, the following transactions will occur in order to effect the Merger:

(i)

each outstanding Quantum Share sold as part of a unit in Quantum’s initial public offering (the “IPO” or “Quantum’s IPO”; each unit, a “Quantum Unit”; and each Quantum Share, a “Public Share”), for the avoidance of doubt, not including any Sponsor Shares as described below, will be converted into a number of TradeStation Shares equal to the lower of: (A) 1.3727; and (B)(1) the

sum of (x) the number of Public Shares outstanding immediately prior to the Closing for which Quantum stockholders have not elected redemption and (y) 750,000, divided by (2) the number of Public Shares outstanding immediately prior to the Closing for which Quantum stockholders have not elected redemption;

(ii)

each PIPE Share and each Quantum Share held by Quantum’s founders, Quantum Ventures LLC (“Sponsor Holdco”) and Chardan Quantum LLC (“Chardan”), and its directors and officers (together with Sponsor Holdco and Chardan, the “Sponsors”) as of the date of the Merger Agreement (the “Sponsor Shares”) will be converted into one TradeStation Share; and

(iii)

each outstanding private warrant exercisable for Quantum Shares (a “Private Warrant”) and each outstanding public warrant exercisable for Quantum Shares sold as part of a unit in Quantum’s IPO (a “Public Warrant” and the Public Warrants together with the Private Warrants, the “Quantum Warrants”) will become a warrant exercisable for the number of TradeStation Shares that the holder thereof would have received if such warrant had been exercisable and exercised immediately prior to the Merger (each such warrant exercisable for TradeStation Shares, a “TradeStation Warrant”).

In addition, prior to the Closing, TradeStation will undergo a pre-closing restructuring which will result in there being 163,748,232 TradeStation Shares issued and outstanding prior to the Merger, all held by Monex, the sole stockholder of TradeStation. At the Closing, Monex will retain 129,750,000 TradeStation Shares and deliver the remaining 33,998,232 TradeStation Shares to an escrow agent to be held in escrow subject to certain earn out conditions (the “Monex Earn Out Shares”). In addition, at the Closing, Sponsor Holdco and Chardan will deliver to the escrow agent to be held in escrow subject to certain earn out conditions an aggregate of 948,894 TradeStation Shares that Sponsor Holdco and Chardan will receive as consideration in the Merger (the “Sponsor Earn Out Shares,” and together with the Monex Earn Out Shares, the “Earn Out Shares”). The Earn Out Shares will be released upon the achievement of certain milestones (based on certain price targets of TradeStation Shares following the Closing). In the event such milestones are not met within five years of the Closing, the Earn Out Shares will be automatically released to TradeStation for cancellation.

The Quantum Units, Public Shares and Public Warrants are listed on the New York Stock Exchange (the “NYSE”) under the ticker symbols “QFTA.U,” “QFTA” and “QFTA WS,” respectively. Prior to the Merger, each Quantum Unit will separate into its components consisting of one Public Share and one Public Warrant. TradeStation intends to apply to have the TradeStation Shares and TradeStation Warrants listed on the NYSE under the ticker symbols “TRDE” and “TRDE WS,” respectively. While trading on the NYSE is expected to begin on the first business day following the Closing Date, there can be no assurance that the TradeStation Shares or TradeStation Warrants will be listed on the NYSE or that a viable and active trading market will develop. See “Risk Factors” beginning on page 40 for more information.

As described in this proxy statement/prospectus, Quantum stockholders are being asked to consider and vote upon the Merger and the other proposals set forth herein at the Special Meeting in lieu of an annual meeting of Quantum stockholders. Each of the proposals is more fully described in this proxy statement/prospectus, which you should read carefully and in its entirety before voting. Only holders of record of Quantum Shares at 5:00 p.m. (New York City time) on           , 2022 are entitled to notice of the Special Meeting and to vote and have their votes counted at the Special Meeting and any adjournments or postponements thereof.

After careful consideration, the Quantum Board has unanimously approved the Merger Agreement and the transactions contemplated thereby and recommends that Quantum stockholders vote “FOR” adoption of the Merger Agreement and “FOR” the other matters to be considered at the Special Meeting.

The board of directors of TradeStation (the “TradeStation Board”) and the board of directors of Merger Sub have unanimously approved the Merger Agreement and the transactions contemplated thereby. Monex, as the sole stockholder of TradeStation, and TradeStation, as the sole stockholder of Merger Sub, have consented to the adoption of the Merger Agreement and approval of the Merger and the other transactions contemplated thereby.

Quantum and TradeStation cannot complete the Merger unless the requisite number of Quantum stockholders vote to adopt the Merger Agreement. Quantum is sending its stockholders this proxy statement/​prospectus to ask them to vote in favor of the matters described in this proxy statement/prospectus.

Contemporaneously with the execution of the Merger Agreement, Quantum, the Sponsors, TradeStation and Monex entered into a Sponsor Support Agreement (as amended by the Letter dated April 28, 2022 from the Sponsors to Quantum and TradeStation, the “Sponsor Support Agreement”), pursuant to which, among other things, each Sponsor agreed (i) to vote any of the Sponsor Shares and any of the Public Shares held by them in favor of the Business Combination and (ii) not to redeem any shares they hold at the Special Meeting. Currently, the Sponsors own an aggregate of 5,031,250 Sponsor Shares and 901 Public Shares, which they have agreed to vote in connection with the Special Meeting. Further, pursuant to the Sponsor Support Agreement, Sponsor Holdco and Chardan have agreed to forfeit at Closing an aggregate of 1,460,554 Sponsor Shares; accordingly, the Sponsors will own 3,570,696 Sponsor Shares (948,894 of which are the Sponsor Earn Out Shares) following the Closing.

The following table illustrates the varying ownership amounts and percentages for TradeStation after the Merger under three scenarios: one with no redemptions (0.0%) by Public Stockholders, one with one-half (50%) redemptions by Public Stockholders and one with maximum redemptions (100.0%) by Public Stockholders. The ownership percentages below do not take into account TradeStation Shares underlying the Quantum Warrants, but do include the Earn Out Shares.

​	As of March 31, 2022(1)
​	Assuming no redemptions				Assuming 50% redemptions				Assuming maximum redemptions
​	Shares		%		Shares		%		Shares		%
Public Stockholders(2)	​	20,875,000	​	10.4	​	10,812,500	​	5.6	​	0	​	0
Sponsor Shares (including the Sponsor Earn Out Shares)	​	3,570,696	​	1.7	​	3,570,696	​	1.8	​	3,570,696	​	1.9
Monex Shares (including Monex’s PIPE Shares and Monex Earn Out Shares)	​	168,748,232	​	83.8	​	168,748,232	​	88.3	​	168,748,232	​	93.5
PIPE Shares (excluding Monex’s PIPE Shares)	​	8,250,000	​	4.1	​	8,250,000	​	4.3	​	8,250,000	​	4.6
Total TradeStation Shares Outstanding at Closing(3)	​	201,443,928	​	100.0	​	191,381,428	​	100.0	​	180,568,928	​	100.0

(1)

The figures in the above table are presented only as illustrative examples and are based on the assumptions described above, which may be different from the actual amount of redemptions in connection with the Merger. See “Unaudited Pro Forma Condensed Combined Financial Information.”

(2)

Includes 20,125,000 TradeStation Shares, plus 750,000 additional TradeStation Shares the (“Non-Redemption Bonus Shares”) to be issued in the aggregate to Public Stockholders who have elected not to redeem their Quantum Shares. Such 750,000 Non-Redemption Bonus Shares will be delivered as Merger consideration ratably to such Public Stockholders that hold any number of Quantum Shares not redeemed (subject to the cap on the Exchange Ratio described elsewhere in this proxy statement/​prospectus).

(3)

Excludes any grants or vesting of restricted stock units or performance stock units pursuant to the Omnibus Incentive Plan, including those described in the Executive Agreements with each of TradeStation’s named executive officers. See “TradeStation Management’s Discussion and Analysis of Financial Condition and Results of Operations — Compensation Arrangements to be Adopted in Connection with the Proposed Business Combination — 2021 Omnibus Incentive Plan — Initial Equity Awards.”

The Sponsors, TradeStation and their respective affiliates may, subject to applicable law, purchase shares in privately negotiated transactions or in the open market either prior to or following the completion of the Merger. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. The purpose of such purchases would be to (i) vote such shares in favor of the Merger and thereby increase the likelihood of obtaining stockholder approval of the Merger or (ii) reduce the number of shares exercising redemption rights. This may result in the completion of the Merger that may not otherwise have been possible. None of the funds in the trust account (the “Trust Account”) that holds a portion of the proceeds of the IPO and a portion of the proceeds of the concurrent sale of the Private Warrants will be used to purchase Public Shares in such transactions.

Pursuant to Quantum’s current certificate of incorporation, and irrespective of whether a Public Stockholder votes for or against the Merger Proposal, such holder may demand that Quantum redeem its Public Shares for cash if the Merger is consummated. Quantum stockholders will be entitled to receive cash for these shares only if, no later than 5:00 p.m. (New York City time) on           , 2022 (two business days prior to the date of the Special Meeting), they:

(i)

submit a written demand to Quantum’s transfer agent that Quantum redeem their Public Shares for cash;

(ii)

certify in such written demand for redemption that they “ARE” or “ARE NOT” seeking to redeem more than an aggregate of 20% of the Public Shares together with their affiliates or any Person(s) with whom they are acting in concert or as a “group” ​(as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)); and

(iii)

deliver such Public Shares to Quantum’s transfer agent (physically or electronically).

If the Merger is consummated and a Public Stockholder properly demands redemption of its Public Shares, Quantum will redeem each such Public Shares for a pro rata portion of the Trust Account that holds a portion of the proceeds from Quantum’s IPO and a portion of the proceeds of the concurrent sale of the Private Warrants, calculated as of two business days prior to the consummation of the Merger. Holders of Quantum Units must elect to separate the underlying Public Shares and Public Warrants prior to exercising redemption rights with respect to the Public Shares. Holders of Quantum Units may instruct their broker to do so, or if a holder holds Quantum Units registered in its own name, the holder must contact Quantum’s transfer agent directly and instruct it to do so. Public Stockholders may elect to redeem all or a portion of their Public Shares even if they vote for the Merger Proposal.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF QUANTUM SHARES YOU OWN. To ensure your representation at the Special Meeting, please complete and return the enclosed proxy card or submit your proxy by following the instructions contained in this proxy statement/​prospectus and on your proxy card. Please submit your proxy promptly whether or not you expect to participate in the Special Meeting. Submitting a proxy now will NOT prevent you from being able to vote online during the Special Meeting. If your Public Shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that shares held beneficially by you are voted in accordance with your instructions.

TradeStation will be an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, and is therefore eligible to take advantage of certain reduced reporting requirements otherwise applicable to other public companies.

Immediately following the Closing, assuming no redemptions by Public Stockholders, Monex will hold 80.93% of the voting power of the outstanding TradeStation Shares (excluding the Monex Earn Out Shares and the Sponsor Earn Out Shares). As such, TradeStation will be a “controlled company” within the meaning of the corporate governance rules of the NYSE. However, TradeStation has elected not to take advantage of the “controlled company” exemption.

This proxy statement/prospectus provides you with detailed information about the Merger. It also contains or references information about Quantum and TradeStation and certain related matters. You are encouraged to read this proxy statement/prospectus carefully. In particular, you should read the “Risk Factors” section beginning on page 40 for a discussion of the risks you should consider in evaluating the Merger and how it will affect you.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Merger, the issuance of TradeStation Shares or other securities in connection with the Merger or the other transactions described in this proxy statement/prospectus, or passed upon the adequacy or accuracy of the disclosure in this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated           , 2022, and is first being mailed to Quantum stockholders on or about           , 2022.

NOTICE OF SPECIAL MEETING

IN LIEU OF 2022 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON           , 2022

Quantum FinTech Acquisition Corporation

4221 W. Boy Scout Blvd., Suite 300
Tampa, FL 33607

NOTICE OF SPECIAL MEETING TO BE HELD ON           , 2022

NOTICE IS HEREBY GIVEN that the Special Meeting of the Quantum Fintech Acquisition Corporation (“Quantum”) stockholders in lieu of an annual meeting of Quantum stockholders will be held virtually, conducted exclusively via live audio webcast at           (New York City time), on        , 2022. You will need the control number that is printed on your proxy card to enter the Special Meeting. Quantum recommends that you log in at least 15 minutes before the Special Meeting to ensure you are logged in when the meeting starts. Please note that you will not be able to attend the Special Meeting in person. You are cordially invited to attend the Special Meeting for the following purposes:

(i)

The Merger Proposal — To consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger, dated as of November 4, 2021 (as amended by the First Amendment to the Agreement and Plan of Merger, dated as of December 17, 2021 and the Second Amendment to the Agreement and Plan of Merger dated April 28, 2022, and as it may be further amended and/or restated from time to time, the “Merger Agreement”), by and among Quantum, TradeStation and Merger Sub, and to approve the transactions contemplated thereby, pursuant to which, among other things, Merger Sub will merge with and into Quantum, with Quantum continuing as the surviving corporation and as a wholly owned subsidiary of TradeStation. A copy of the Merger Agreement is attached as Annex A to the accompanying proxy statement/prospectus (Proposal No. 1);

(ii)

The PIPE Proposal — To consider and vote upon a proposal to approve, for purposes of complying with applicable listing rules of the NYSE, the issuance of 13,250,000 PIPE Shares in a private offering of securities to the PIPE Investors in connection with the Business Combination, which will occur immediately prior to the Closing with such PIPE Shares converted into an equal number of TradeStation Shares in the Merger, and the issuance by TradeStation, as the successor to Quantum’s obligations under the Subscription Agreements, of up to 4,038,462 Additional Shares following the Closing based on the trading price of the TradeStation Shares during the relevant measurement period, and subject to certain other conditions, as further described under “Proposal No. 2 — The PIPE Proposal” ​(Proposal No. 2); and

(iii)

The Adjournment Proposal — To consider and vote upon a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Merger Proposal or the PIPE Proposal (Proposal No. 3).

Quantum also will transact any other business as may properly come before the Special Meeting or any adjournment or postponement thereof.

Each of these proposals is more fully described in the accompanying proxy statement/prospectus, which you should read carefully and in its entirety before voting. The Quantum Board has set           , 2022 as the record date for the Special Meeting. Only holders of record of Quantum Shares at 5:00 pm (New York City time) on           , 2022 are entitled to notice of the Special Meeting and to have their votes counted at the Special Meeting and any adjournments or postponements of the Special Meeting.

After careful consideration, the Quantum Board has unanimously approved each of the foregoing proposals and recommends that you vote “FOR” each of these proposals. Approval of the Merger Proposal requires the affirmative vote of a majority of the outstanding Quantum Shares entitled to vote thereon.

Approval of the PIPE Proposal and the Adjournment Proposal requires the affirmative vote of the majority of the votes cast by the Quantum stockholders present at the Special Meeting by virtual attendance or by proxy and entitled to vote thereon.

The approval of the Merger Proposal and the PIPE Proposal is a condition to the consummation of the Business Combination.

When you consider the Quantum Board’s recommendation of these proposals, you should keep in mind that Quantum’s directors and officers have interests in the Business Combination that are different from, or in addition to, the interests of the Public Stockholders generally. See “Proposal No. 1 — The Merger Proposal — Interests of Quantum’s Directors and Officers and the Sponsors in the Business Combination.” The Quantum Board was aware of and considered these interests, among other matters, in evaluating and negotiating the transactions contemplated by the Merger Agreement and in recommending to Quantum stockholders that they vote in favor of the proposals presented at the Special Meeting.

Pursuant to Quantum’s current certificate of incorporation, Quantum will provide Public Stockholders the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account that holds a portion of the proceeds from Quantum’s IPO and a portion of the proceeds of the concurrent sale of the Private Warrants (including interest earned on the funds held in the Trust Account, net of taxes), as of two (2) business days prior to the consummation of the Business Combination. For illustrative purposes, based on funds in the Trust Account of $201,265,127 as of March 31, 2022, the estimated per share redemption price would have been $10.00. Public Stockholders may elect to redeem their Public Shares even if they vote for the Merger Proposal. A Public Stockholder, together with any of its affiliates or any other Person with whom it is acting in concert or as a “group” ​(as defined under Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 20% of the Public Shares without Quantum’s prior consent. The Sponsor Shares will be excluded from the pro rata calculation that will be used to determine the per share redemption price. During the quarter ended March 31, 2022, $64,500 was withdrawn from the Trust Account to pay taxes.

Contemporaneously with the execution of the Merger Agreement, Quantum, certain directors of Quantum, the Sponsors, TradeStation and Monex entered into the Sponsor Support Agreement pursuant to which, among other things, the Sponsors agreed (i) to vote all of their Sponsor Shares and all of the Public Shares held by them in favor of the Business Combination and (ii) not to redeem any of the shares they hold at the Special Meeting. Currently, the Sponsors own an aggregate of 5,031,250 Sponsor Shares and 901 Public Shares, which they have agreed to vote in connection with the Special Meeting. Further, pursuant to the Sponsor Support Agreement, Sponsor Holdco and Chardan have agreed to forfeit at Closing an aggregate of 1,460,554 Sponsor Shares; accordingly, the Sponsors will own 3,570,696 Sponsor Shares following the Closing (984,894 of which are the Sponsor Earn Out Shares).

The proxy statement/prospectus accompanying this notice explains the Merger Agreement and the transactions contemplated thereby, as well as the proposals to be considered at the Special Meeting. Please review the proxy statement/prospectus accompanying this notice carefully.

As of March 31, 2022, there was $201,265,127 on deposit in the Trust Account, which Quantum intends to use to pay expenses in connection with the Business Combination and, together with the cash raised in connection with the PIPE Investment, for general corporate purposes of TradeStation. During the quarter ended March 31, 2022, $64,500 was withdrawn from the Trust Account to pay taxes. Each redemption of Public Shares will decrease the amount of cash on deposit in the Trust Account and available for these purposes. The Business Combination may be consummated only if Quantum has at least $5,000,001 of net tangible assets after giving effect to the redemption of any Public Shares submitted for redemption. Assuming consummation of the PIPE Investment, this condition will be met.

All Quantum stockholders are cordially invited to participate in the Special Meeting by accessing https://​           . To ensure your representation at the Special Meeting, however, you should complete, sign, date and return the enclosed proxy card as soon as possible. If you are a Quantum stockholder of record, you may also cast your vote online during the Special Meeting. If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be deemed voted “FOR” each of the proposals

presented at the Special Meeting. If you fail to return your proxy card and do not vote online during the Special Meeting, it will have the same effect as a vote “AGAINST” the Merger Proposal but will have no effect on the PIPE Proposal or the Adjournment Proposal (if necessary). If you vote to “ABSTAIN” from voting your shares represented at the meeting by virtual attendance or by proxy on one or more of the proposals, it will have the same effect as a vote “AGAINST” the Merger Proposal but will have no effect on the PIPE Proposal and the Adjournment Proposal (if necessary), as applicable, other than reducing the total number of shares counted to determine if a majority of the voting power of the shares voted in favor of the applicable proposal. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to participate in the Special Meeting and vote online during the Special Meeting, obtain a legal proxy from your broker or bank and e-mail a copy (legible photograph is sufficient) of your legal proxy to           . Quantum believes the proposals presented to the stockholders at the Special Meeting will be considered non-routine and, therefore, your broker or bank cannot vote your shares without your instruction on any of the proposals presented at the Special Meeting.

Public Stockholders may elect to redeem their Public Shares even if they vote “FOR” the Merger Proposal.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF QUANTUM SHARES YOU OWN. Whether or not you plan to participate in the Special Meeting, please complete, sign, date and mail the enclosed proxy card in the postage-paid envelope provided at your earliest convenience. You may also submit a proxy by telephone or via the Internet by following the instructions printed on your proxy card. If you hold your shares through a broker, bank or other nominee, you should direct the vote of your shares in accordance with the voting instruction form received from your broker, bank or other nominee.

If you have any questions or need assistance with voting, please contact Quantum’s proxy solicitor,           .

Please read carefully the sections in the proxy statement/prospectus accompanying this notice regarding attending and voting at the Special Meeting to ensure that you comply with these requirements. Terms not otherwise defined herein have the meanings assigned to them in the accompanying proxy statement/prospectus.

BY ORDER OF THE BOARD OF DIRECTORS

John M. Schaible
Chairman of the Board

Table of Contents

​	Page
ABOUT THIS PROXY STATEMENT/PROSPECTUS	​	1
INDUSTRY AND MARKET DATA	​	1
TRADEMARKS, TRADE NAMES AND SERVICE MARKS	​	1
FREQUENTLY USED TERMS	​	2
SUMMARY OF THE MATERIAL TERMS OF THE MERGER	​	11
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS	​	13
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS	​	24
UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER SHARE DATA OF QUANTUM AND TRADESTATION	​	38
PRICE RANGE OF SECURITIES AND DIVIDENDS	​	39
RISK FACTORS	​	40
FORWARD-LOOKING STATEMENTS	​	117
SPECIAL MEETING OF QUANTUM STOCKHOLDERS IN LIEU OF AN ANNUAL MEETING OF QUANTUM STOCKHOLDERS	​	118
PROPOSAL NO. 1 — THE MERGER PROPOSAL	​	122
PROPOSAL NO. 2 — THE PIPE PROPOSAL	​	144
PROPOSAL NO. 3 — THE ADJOURNMENT PROPOSAL	​	146
THE MERGER AGREEMENT	​	147
AGREEMENTS ENTERED INTO IN CONNECTION WITH THE MERGER AGREEMENT	​	160
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS	​	162
INFORMATION ABOUT QUANTUM	​	171
QUANTUM’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION	​	179
TRADESTATION’S SUMMARY HISTORICAL FINANCIAL AND OPERATING DATA	​	186
TRADESTATION’S BUSINESS	​	188
TRADESTATION MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	​	218
FISCAL 2022 EXECUTIVE COMPENSATION	​	250
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION	​	263
MANAGEMENT FOLLOWING THE MERGER	​	279
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS	​	286
DESCRIPTION OF TRADESTATION WARRANTS	​	290
DESCRIPTION OF CAPITAL STOCK OF TRADESTATION	​	293
TRADESTATION SHARES ELIGIBLE FOR FUTURE SALE	​	299
COMPARISON OF RIGHTS OF TRADESTATION STOCKHOLDERS AND QUANTUM STOCKHOLDERS	​	301
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF TRADESTATION	​	310
APPRAISAL RIGHTS	​	312
ANNUAL MEETING STOCKHOLDER PROPOSALS	​	312
OTHER STOCKHOLDER COMMUNICATIONS	​	312
LEGAL MATTERS	​	312
EXPERTS	​	312

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​	Page
DELIVERY OF DOCUMENTS TO STOCKHOLDERS	​	312
TRANSFER AGENT AND REGISTRAR	​	312
WHERE YOU CAN FIND MORE INFORMATION	​	313
INDEX TO FINANCIAL STATEMENTS	​	F-1
Annex A-1 Agreement and Plan of Merger, dated as of November 4, 2021, by and among Quantum FinTech Acquisition Corporation, TSG Merger Sub, Inc., and TradeStation Group, Inc.	​	A-1-1
Annex A-2 First Amendment to the Agreement and Plan of Merger, dated as of December 17, 2021, by and among Quantum FinTech Acquisition Corporation, TSG Merger Sub, Inc., and TradeStation Group, Inc.	​	A-2-1
Annex A-3 Second Amendment to the Agreement and Plan of Merger, dated April 28, 2022, by and among Quantum FinTech Acquisition Corporation, TSG Merger Sub, Inc., and TradeStation Group, Inc.	​	A-3-1

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the Securities and Exchange Commission (the “SEC”) by TradeStation, constitutes a prospectus of TradeStation under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to TradeStation Shares if the Merger described herein is consummated. This document also constitutes a notice of meeting and a proxy statement provided by Quantum under Section 14(a) of the Exchange Act, with respect to the Special Meeting of Quantum stockholders at which Quantum stockholders will be asked to consider and vote upon a proposal to approve the Merger by the adoption of the Merger Agreement, among other matters.

INDUSTRY AND MARKET DATA

Presented in this proxy statement/prospectus are industry data, information and statistics regarding the markets in which TradeStation operates as well as publicly available information, industry and general publications and research and studies conducted by third parties. This information is supplemented where necessary with TradeStation’s own internal estimates and information obtained from other sources, taking into account publicly available information about other industry participants and TradeStation management’s judgment where information is not publicly available. This information appears in “Summary of the Proxy Statement/Prospectus,” “TradeStation Management’s Discussion and Analysis of Financial Condition and Results of Operation,” “Information Related to TradeStation — TradeStation’s Business” and other sections of this proxy statement/prospectus.

Industry publications, research, studies and forecasts generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements in this proxy statement/prospectus. These forecasts and forward-looking information are subject to uncertainty and risk due to a variety of factors, including those described under “Risk Factors.” These and other factors could cause results to differ materially from those expressed in any forecasts or estimates.

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

TradeStation has proprietary rights to trademarks used in this proxy statement/prospectus that are important to its business, many of which are registered under applicable intellectual property laws. Solely for convenience, trademarks and trade names referred to in this proxy statement/prospectus may appear without the “®” or “TM” symbols, but the lack of such symbols is not intended to indicate, in any way, that TradeStation will not assert, to the fullest extent possible under applicable law, its rights or the rights of the applicable licensor to these trademarks and trade names. The use or display herein of other companies’ trademarks, trade names or service marks is not intended to imply a relationship with, or endorsement or sponsorship of TradeStation by, any other companies, or a sponsorship or endorsement of any such other companies by TradeStation. Each trademark, trade name or service mark of any other company appearing in this proxy statement/prospectus is the property of its respective holder.

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FREQUENTLY USED TERMS

In addition, in this document:

“Absolute Share Limit” means the total number of TradeStation Shares that may be issued under the Omnibus Incentive Plan.

“Action” means any claim, action, suit, assessment, arbitration or legal, judicial or administrative proceeding (whether at Law or in equity) or arbitration.

“account acquisition cost” means, for a given period, marketing expense, excluding internal headcount costs, for such period divided by gross new accounts during such period. In other words, it is the amount of marketing dollars deemed to have been invested to acquire one new account during a given period. An account is not considered acquired until it is funded.

“Additional Shares” means up to 4,038,462 additional TradeStation Shares that PIPE Investors (other than Monex) will be entitled to if the Adjustment Period VWAP is less than $10.00 per share, equal to the product of (x) the number of PIPE Shares, (excluding any Incentive Shares) issued to the PIPE Investor at the Closing that such PIPE Investor holds through the Measurement Date, multiplied by (y) a fraction, (A) the numerator of which is $10.00 (as adjusted for any stock split, reverse stock split or similar adjustment following the Closing) minus the Adjustment Period VWAP and (B) the denominator of which is the Adjustment Period VWAP.

“Adjusted EBITDA” means, for the purposes of TradeStation’s unaudited projected financial information unless otherwise noted herein, Adjusted Pre-tax Income (loss) before interest expense on borrowings and depreciation and amortization.

“Adjusted Pre-tax Income (loss)” means, for the purposes of TradeStation’s unaudited projected financial information unless otherwise noted herein, net income (loss) attributable to TradeStation before income tax provision (benefit) and certain expenses and other items, including swap fair value gains (losses), severance expenses, write-offs, certain contractual settlements and cryptocurrency timing gains and losses.

“Adjustment Period” means the 60 Trading Day period beginning on and including the date a resale registration statement for the PIPE Shares is declared effective.

“Adjustment Period VWAP” means the higher of (x) the lower of (A) the VWAP of TradeStation Shares, determined for each of the successive 60 Trading Days of the Adjustment Period and (B) the average of the VWAP of TradeStation Shares determined for each of the successive 10 Trading Days ending on and including the last day of the Adjustment Period and (y) $6.50.

“Amended Bylaws” means the amended and restated Bylaws of TradeStation adopted pursuant to the Pre-Closing Restructuring.

“Amended Charter” means the amended and restated Articles of Incorporation of TradeStation adopted pursuant to the Pre-Closing Restructuring.

“AML” means Anti-Money Laundering.

“ASC” means Accounting Standards Codification.

“ASC 480” means ASC 480, Distinguishing Liabilities from Equity.

“ASC 815” means ASC 815, Derivatives and Hedging.

“blockchain” means a digital ledger that provides a secure way of making and recording transactions, agreements and contracts. Blockchains are unique in that their ledger is distributed across a network of computers such that it cannot be controlled by a single entity and therefore cannot be subject to a single point of failure.

“brand awareness marketing” means, including with respect to, and in the context of, TradeStation’s marketing methods and approaches to increase customer account growth, marketing, whether digital or in other forms (such as promotional events), designed to increase over time the measure of how memorable and

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recognizable a brand is to a target audience, in effect to achieve deeper market saturation with that audience, and in particular of the kind which TradeStation initiated in the third quarter of fiscal 2022. Brand awareness marketing seeks to achieve this result by exposing a company’s brand and marketing messages frequently, in multiple venues, expecting some initial or immediate targeted results but expecting increased, larger targeted results over an extended time period as market saturation increases, and without the company being able to easily, if at all, track or monitor which individual exposures, marketing messages or events have resulted in new customer accounts.

“broker” and “brokerage” mean a natural person or legal entity, as applicable, that acts as an intermediary in the purchase and sale of goods or services by other parties, usually in exchange for some form of compensation. For the avoidance of doubt, use of the term “broker” or “brokerage”: (i) is not limited to securities brokers or intended to imply that TradeStation Crypto is an SEC-licensed securities broker or dealer, or a CFTC-licensed futures broker or FCM; (ii) when describing TradeStation Crypto, its business or its offerings under the TradeStation trademark or otherwise, means TradeStation Crypto acting as an intermediary, on an agency or equivalent basis, subject to the federal and state money services business, money transmitter and similar licenses, for the purchase and sale of the cryptocurrencies its platform supports; and (iii) when describing TradeStation Securities, its business or its offerings under the TradeStation trademark or otherwise, means TradeStation Securities acting as an intermediary, on an agency or equivalent basis, as an SEC-licensed broker-dealer and CFTC-licensed FCM, for the purchase and sale of the securities and futures contracts its platform supports.

“Broker Non-Vote” means the failure of a Quantum stockholder, whose Quantum Shares are held in “street name” by a broker or other nominee, to give voting instructions to such broker or other nominee.

“BSA” means the Bank Secrecy Act, as amended.

“Business Combination” means the Merger and the other transactions contemplated by the Merger Agreement.

“Business Combination Proposal” means any offer, inquiry, proposal or indication of interest, written or oral relating to any merger, recapitalization or similar business combination transaction.

“CARES Act” means the Coronavirus Aid, Relief and Economic Security Act of 2020, as amended.

“CFTC” means the Commodity Futures Trading Commission.

“Change in Control Transaction” means any transaction or series of related transactions (a) under which any Person(s), directly or indirectly, acquires or otherwise purchases (i) another Person or any of its affiliates or (ii) all or a material portion of the assets, business or equity securities of another Person or (b) under which any Person(s) makes any equity or similar investment in another Person, in each case, that results, directly or indirectly, in the stockholders of a Person, as applicable, as of immediately prior to such transaction holding, in the aggregate, less than fifty percent (50%) of the voting shares of such Person (or any successor or parent company of such Person) immediately after the consummation thereof (whether by merger, consolidation, tender offer, recapitalization, purchase or issuance of equity securities, tender offer or otherwise).

“Chardan” means Chardan Quantum LLC, a Delaware limited liability company.

“Chardan Capital Markets” means Chardan Capital Markets L.L.C., the representative of the underwriters in the IPO.

“Closing” means the closing of the Business Combination.

“Closing Date” means the date on which the Closing is completed.

“CME” means CME Group.

“Code” means the Internal Revenue Code of 1986, as amended.

“cold wallet” means a digital wallet that stores private keys in any fashion that is disconnected from the internet. Common cold storage examples include offline computers, memory drives or paper records.

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“COVID-19” means SARS CoV-2 or COVID-19, and any evolutions thereof.

“COVID-19 Measures” means any quarantine, “shelter in place,” “stay at home,” workforce reduction, social distancing, shut down, closure, sequester or any other Law, Governmental Order, Action, directive, pronouncement, guidelines or recommendations by any Governmental Authority (including the Centers for Disease Control and Prevention and the World Health Organization) in connection with, related to or in response to COVID-19, including, but not limited to, the CARES Act and the Families First Coronavirus Response Act, or any changes thereto.

“CPRA” means the California Privacy Rights Act of 2020.

“cryptocurrency” means a digital representation of value that functions as a medium of exchange, a unit of account and/or a store of value that is built using blockchain technology. Its creation and transfer is based on an open source cryptographic protocol and is not backed by any central bank or government. A stablecoin is a type of cryptocurrency.

“DDoS” means distributed denial of service.

“DGCL” means the Delaware General Corporation Law, as amended.

“digital wallet” means an electronic device, online service, software program or other digital or physical record that allows one party to make electronic transactions with another party.

“Disclosure Letters” means the disclosure letters that modify the representations, warranties and covenants in the Merger Agreement.

“DTC” means The Depository Trust Company.

“DTCC” means The Depository Trust & Clearing Corporation.

“Earn Out Period” means the period beginning on the Closing Date and ending on the date that is the fifth (5th) anniversary of the Closing Date.

“Earn Out Shares” means, collectively, the Sponsor Earn Out Shares and the Monex Earn Out Shares.

“Effective Time” means the effective time of the Merger pursuant to the Merger Agreement.

“ETF” means exchange traded fund.

“E.U.” means the European Union.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Ratio” means the lower of: (A) 1.3727; and (B)(1) the sum of (x) the number of Public Shares outstanding immediately prior to the Closing for which Quantum stockholders have not elected redemption and (y) 750,000, divided by (2) the number of Public Shares outstanding immediately prior to the Closing for which Quantum stockholders have not elected redemption.

“Excluded Share” means, without duplication, each (i) Quantum Share for which redemption rights have been exercised, (ii) Quantum Share (if any) that, at the Effective Time, is held in the treasury of Quantum and (iii) Quantum Share (if any) that, prior to the Effective Time, is owned by Merger Sub or TradeStation.

“FASB” means the Financial Accounting Standards Board.

“FBCA” means the Florida Business Corporation Act.

“FCA” means the U.K. Financial Conduct Authority.

“FCM” means futures commission merchant.

“FDIC” means the Federal Deposit Insurance Corporation.

“FINRA” means the Financial Industry Regulatory Authority (and any predecessors thereof).

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“FINRA Foundation” means the FINRA Investor Education Foundation.

“First COVID Year” means April 1, 2020 through March 31, 2021, April 2020 being the first full calendar month that COVID-19 Measures were broadly implemented; such one-year period corresponds to TradeStation’s fiscal 2021.

“First Merger Agreement Amendment” means the First Amendment to the Agreement and Plan of Merger, dated December 17, 2021, by and among Quantum, TradeStation and Merger Sub.

“FIS” means Fidelity National Information Services, Inc.

“Fiscal year” or “fiscal year” means, as it relates to TradeStation, the 12 months ended March 31. Accordingly, references herein to “fiscal 2018” relate to the 12 months ended March 31, 2018, references herein to “fiscal 2019” relate to the 12 months ended March 31, 2019, references herein to “fiscal 2020” relate to the 12 months ended March 31, 2020, references herein to “fiscal 2021” relate to the 12 months ended March 31, 2021, references herein to “fiscal 2022” relate to the 12 months ended March 31, 2022, references herein to “fiscal 2023” relate to the 12 months ended March 31, 2023 and references herein to “fiscal 2024” relate to the 12 months ended March 31, 2024. References to any given year in this proxy statement/prospectus will be to a calendar year, and not a fiscal year, unless otherwise noted.

“GAAP” means generally accepted accounting principles in the U.S.

“GDPR” means the E.U. General Data Protection Regulation.

“GLBA” means the Gramm-Leach-Bliley Act of 1999.

“Gen-Z” means the group of people born between 1996 and 2005 (aged between 17 and 26 in 2022).

“Governmental Authority” means any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory or administrative agency (including the CFTC, SEC and state securities agencies or regulatory bodies), self-regulatory organizations (including the NFA and FINRA), CME (instead of NFA) acting as the primary regulator of an FCM, governmental commission, department, board, bureau, agency or instrumentality and court or tribunal.

“Governmental Order” means any order, judgment, injunction, decree, writ, stipulation, determination or award, in each case, entered by or with any Governmental Authority.

“hot wallet” means a digital wallet that is always connected to the internet. The term “hot wallet” includes warm wallets, which are hot wallets that use whitelisting to limit the external wallet(s) to which assets may be transferred. A hot wallet is often updated along with all the other digital wallets in a given network, and assets are easily exchanged from hot wallet to hot wallet.

“ICE” means Intercontinental Exchange.

“Incentive Shares” means the 750,000 additional Quantum Shares, in the aggregate, issued to PIPE Investors, other than Monex, each of whose aggregate subscription amount equals or exceeds $5.0 million, for no additional consideration.

“Intended Tax Treatment” means the treatment of the Merger as a tax-free reorganization within the meaning of Section 368(a) of the Code.

“Investment Company Act” means Investment Company Act of 1940, as amended.

“IPO” or “Quantum’s IPO” means the initial public offering of Quantum Units, consummated on February 9, 2021, and the underwriters’ election to fully exercise their over-allotment option on February 12, 2021.

“IRS” means the U.S. Internal Revenue Service.

“JOBS Act” means the Jumpstart Our Business Startups Act of 2012.

“Law” means any statute, law, ordinance, rule, regulation or Governmental Order, in each case, of any Governmental Authority.

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“LIBOR” means the London Interbank Offered Rate.

“Measurement Date” means the last day of the Adjustment Period.

“Merger” means the merger of Merger Sub with and into Quantum at the Effective Time, with Quantum being the surviving corporation.

“Merger Agreement” means the Agreement and Plan of Merger, dated as of November 4, 2021, by and among TradeStation, Quantum and Merger Sub, as amended by the First Merger Agreement Amendment and the Second Merger Agreement Amendment and as such agreement may be further amended or otherwise modified from time to time in accordance with its terms.

“Merger Proposal” means the proposal to adopt the Merger Agreement and approve the Business Combination, described in this proxy statement/prospectus.

“Merger Sub” means TSG Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of TradeStation.

“Millennials” means the group of people born between 1981 and 1996 (aged between 26 and 41 in 2022).

“Monex Earn Out Shares” means the 33,998,232 TradeStation Shares to be delivered by Monex at the Closing to an escrow account established pursuant to an escrow agreement to be entered into at or prior to the Closing by Quantum, Sponsor HoldCo, Chardan, TradeStation, Monex and the escrow agent.

“Monex Shares” means TradeStation Shares held by Monex, excluding any PIPE Shares to be held by Monex.

“Monex Triggering Event” means, with respect to Monex, each of Triggering Event I, Triggering Event II and a change in control of TradeStation where the per share consideration is equal to or greater than the thresholds of Triggering Event I or Triggering Event II.

“NFA” means the National Futures Association.

“Non-Redemption Bonus Shares” means the fixed pool of 750,000 additional TradeStation Shares that TradeStation will be issuing to Public Stockholders at Closing as an incentive to Public Stockholders not to redeem their Public Shares (subject to the cap on the Exchange Ratio described elsewhere in this proxy statement/prospectus).

“NSCC” means the National Securities Clearing Corporation.

“NYSE” means the New York Stock Exchange.

“OCC” means The Options Clearing Corporation.

“OFAC” means the U.S. Department of the Treasury Office of Foreign Asset Control.

“Omnibus Incentive Plan” means the TradeStation Group, Inc. 2021 Omnibus Incentive Plan, subject to TradeStation Board approval and adoption.

“omnibus wallet” means a wallet that combines customers’ assets while maintaining customer by customer segregation at the books-and-records level.

“Outside Date” means February 9, 2023.

“payback period” means the amount of time required for an account to generate trading-related revenue and net interest income at least equal to TradeStation’s account acquisition cost for such account.

“performance-based marketing” means, including with respect to, and in the context of, TradeStation’s marketing methods and approaches to increase customer account growth, digital marketing which is focused on specific digital methods (some of which may include aspects of brand awareness marketing), as well as direct lead referrals, which can be tracked and monitored to measure quantitative success as represented by new account openings that are connected to a particular digital ad, website or a direct referral source.

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“Person” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, governmental agency or instrumentality or other entity of any kind.

“PFOF” means payment for order flow.

“PIPE Investment” means the private placement of Quantum Shares pursuant to the Subscription Agreements.

“PIPE Investor” means an investor party to a Subscription Agreement.

“PIPE Proposal” means the proposal to approve the issuance of 13,250,000 PIPE Shares in a private offering of securities to the PIPE Investors in connection with the Business Combination, which will occur immediately prior to the Closing, with such PIPE Shares converted into an equal number of TradeStation Shares in the Merger, and the issuance by TradeStation, as the successor to Quantum’s obligations under the PIPE Subscription Agreements, of up to 4,038,462 Additional Shares following the Closing based on the trading price of the TradeStation Shares during the relevant measurement period, and subject to certain other conditions, as further described under “Proposal No. 2 — The PIPE Proposal.”

“PIPE Shares” means (a) 12,500,000 Quantum Shares in the aggregate, including 5,000,000 shares subscribed to by Monex and 7,500,000 shares subscribed to by the other PIPE Investors, which the PIPE Investors have committed to purchase pursuant to the Subscription Agreements, at a purchase price of $10.00 per share and (b) the 750,000 Incentive Shares.

“Pre-Closing Restructuring” means the restructuring that TradeStation will undergo prior to the Closing, which will result in there being 163,748,232 TradeStation Shares issued and outstanding prior to the Merger, all held by Monex.

“private key” means a cryptographic code similar to a password that is used to authenticate asset ownership and encrypt a digital wallet.

“Private Warrants” means the Quantum Warrants sold to Sponsor Holdco and Chardan in a private placement in connection with the IPO.

“Public Shares” means the Quantum Shares issued as part of the Quantum Units sold in Quantum’s IPO.

“Public Stockholders” means the holders of Public Shares.

“Public Warrants” means the Quantum Warrants issued as part of the Quantum Units sold in Quantum’s IPO.

“Quantum” means Quantum FinTech Acquisition Corporation, a Delaware corporation.

“Quantum Board” means the board of directors of Quantum.

“Quantum Material Adverse Effect” has the meaning assigned to it in the Merger Agreement.

“Quantum Record Date” means 5:00 p.m. (New York City time) on           , 2022, the record date for the Special Meeting.

“Quantum Shares” means the shares of common stock, par value $0.0001 per share, of Quantum.

“Quantum Stockholder Approval” means the votes of any of Quantum’s capital stock necessary in connection with the entry into the Merger Agreement by Quantum, the consummation of the Business Combination, and the approval of the Quantum Stockholder Matters.

“Quantum Stockholder Matters” means (1) the adoption of the Merger Agreement and approval of the Business Combination; (2) the approval of the issuance of the shares in connection with the PIPE Investment and any other proposals as either the SEC or NYSE (or the respective staff members thereof may indicate are necessary in its comments to the registration statement or in correspondence related thereto, or any other proposals the parties agree are necessary or desirable to consummate the Business

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Combination); (3) adoption and approval of any other proposals as reasonably agreed by Quantum and TradeStation to be necessary or appropriate in connection with the Business Combination; and (4) the adjournment of the Special Meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt any of the foregoing.

“Quantum Units” means the units issued in Quantum’s IPO, each consisting of one Public Share and one Public Warrant.

“Quantum Warrants” means the Private Warrants and the Public Warrants.

“Redemption Deadline” means 5:00 p.m. (New York City time) on the date that is two business days prior to the date of the Special Meeting.

“Registration Rights Agreement” means the agreement that the TradeStation Equityholders and TradeStation will enter into at the Closing pursuant to which, among other things, TradeStation will agree to file a registration statement within 60 days of the Effective Time to register for resale under the Securities Act (A) any outstanding TradeStation Shares or other equity security of TradeStation held by the TradeStation Equityholders immediately following the Closing, (B) any TradeStation Shares issued to the TradeStation Equityholders pursuant to the terms of the Merger Agreement (including the TradeStation Shares issued or issuable upon the exercise of any other equity security issued to the TradeStation Equityholders pursuant to the terms of the Merger Agreement), (C) the Private Warrants (including any TradeStation Shares issued or issuable upon the exercise of any Private Warrants) and (D) any other equity security of TradeStation issued or issuable with respect to the securities referred to in the foregoing clauses (A) through (C) by way of a share dividend or share split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise.

“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act, of 2002.

“SEC” means the Securities and Exchange Commission.

“Second Merger Agreement Amendment” means the Second Amendment to the Agreement and Plan of Merger, dated April 28, 2022, by and among Quantum, TradeStation and Merger Sub.

“Securities Act” means the Securities Act of 1933, as amended.

“SIPC” means the Securities Investor Protection Corporation.

“Special Meeting” means the special meeting of the Quantum stockholders, to be held virtually on           , 2022 at           (New York City time) accessible at https://​                 or at such other time, on such other date and at such other place to which the meeting may be adjourned or postponed.

“Sponsor Earn Out Shares” means the 948,894 TradeStation Shares to be delivered by Sponsor Holdco and Chardan at the Closing to an escrow account established pursuant to an escrow agreement to be entered into at or prior to the Closing by Quantum, Sponsor HoldCo, Chardan, TradeStation, Merger Sub, Monex and the escrow agent.

“Sponsor Holdco” means Quantum Ventures LLC, a Delaware limited liability company.

“Sponsors” means each of Sponsor Holdco, Chardan and the directors and officers of Quantum.

“Sponsor Shares” means the 5,031,250 Quantum Shares, held by the Sponsors as of the date of the Merger Agreement, being (i) with respect to Sponsor Holdco, 3,796,335 Quantum Shares, (ii) with respect to Chardan, 949,084 Quantum Shares and (iii) with respect to all of the directors and officers of Quantum, collectively, 285,831 Quantum Shares. In connection with the Closing, Sponsor Holdco and Chardan will forfeit 1,460,554 Quantum Shares.

“Sponsor Support Agreement” means the support agreement, dated as of November 4, 2021, by and among the Sponsors, Monex, Quantum, certain directors of Quantum and TradeStation, as amended by the Letter Agreement, dated April 28, 2022 from the Sponsors to TradeStation and Quantum and as further amended or modified from time to time.

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“Sponsor Triggering Event” means, with respect to the Sponsors, each of Triggering Event I, Triggering Event II and a change in control of TradeStation where the per share consideration is equal to or greater than the thresholds of Triggering Event I or Triggering Event II.

“SRO” means self-regulatory organization.

“stablecoin” means a type of digital asset and cryptocurrency that is pegged to a “stable” underlying asset such as fiat money or a commodity, including other types of cryptocurrencies. The value of the asset may fluctuate based on the volatility of the underlying asset.

“Subscription Agreements” means the subscription agreements, dated as of November 4, 2021, pursuant to which, among other things, the PIPE Investors agreed to subscribe for and purchase, and Quantum has agreed to issue and sell to the PIPE Investors, an aggregate number of Quantum Shares set forth in such subscription agreements in exchange for an aggregate purchase price of $125,000,000, and to issue Incentive Shares to certain PIPE Investors, on the Closing Date and prior to the Effective Time, on the terms and subject to the conditions set forth therein.

“TradeStation” means TradeStation Group, Inc., a Florida corporation.

“TradeStation Board” means the board of directors of TradeStation.

“TradeStation Crypto” means TradeStation Crypto, Inc.

“TradeStation Equityholders” means certain Quantum stockholders who are party to the Registration Rights Agreement and Monex.

“TradeStation International” means TradeStation International Ltd.

“TradeStation Securities” means TradeStation Securities, Inc.

“TradeStation Shares” means the shares of common stock, par value $0.01 per share, of TradeStation.

“TradeStation Support Agreement” means the support agreement, dated as of November 4, 2021, entered into by and among Monex, Quantum and TradeStation, as amended or modified from time to time.

“TradeStation Private Warrant” means each Private Warrant that by virtue of the Business Combination becomes a warrant to purchase TradeStation Shares, with each such warrant exercisable for the number of TradeStation Shares that the holder thereof would have received if such warrant had been exercisable and exercised immediately prior to the Merger.

“TradeStation Public Warrant” means each Public Warrant that by virtue of the Business Combination becomes a warrant to purchase TradeStation Shares, with each such warrant exercisable for the number of TradeStation Shares that the holder thereof would have received if such warrant had been exercisable and exercised immediately prior to the Merger.

“TradeStation Warrants” means the TradeStation Private Warrants and the TradeStation Public Warrants.

“Trading Day” means any day on which TradeStation Shares or Quantum Shares are actually traded on the Trading Market.

“Trading Market” means the NYSE or such other stock market on which TradeStation Shares or Quantum Shares (being the principal stock market on which such shares shall then be trading) are trading.

“Triggering Event I” means the first date on which the VWAP over any 20 Trading Days within the preceding 30 consecutive Trading Day period during the Earn Out Period is greater than or equal to $12.50.

“Triggering Event II” means the first date on which the VWAP over any 20 Trading Days within the preceding 30 consecutive Trading Day period during the Earn Out Period is greater than or equal to $15.00.

“Trust Account” means the trust account that holds a portion of the proceeds of Quantum’s IPO and a portion of the proceeds of the concurrent sale of the Private Warrants, maintained by Continental Stock Transfer & Trust Company, a New York corporation, acting as trustee.

9

“Trust Agreement” means the Investment Management Trust Agreement, effective as of February 4, 2021, by and between Quantum and the Continental Stock Transfer & Trust Company, as on file with the SEC reports of Quantum as of November 4, 2021.

“U.K.” means the United Kingdom of Great Britain and Northern Ireland.

“U.K. GDPR” means the U.K. General Data Protection Regulation.

“U.S.” means the United States of America.

“U.S.A. Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.

“U.S. dollar,” “USD,” “US$” and “$” mean the legal currency of the U.S.

“VWAP” means, with respect to a Trading Day, the volume weighted average price for such Trading Day of TradeStation Shares, as applicable, on the Trading Market as reported by Bloomberg Financial L.P. using the AQR function or, if not available, by another authoritative source mutually acceptable to TradeStation and Quantum.

“WARN Act” means the Worker Adjustment and Retraining Notification Act, as amended.

“Warrant Agreement” means that certain Warrant Agreement, dated February 4, 2021, by and between Quantum and Continental Stock Transfer & Trust Company, as warrant agent.

“whitelisting” means a security feature that limits the external wallet(s) to which assets may be transferred to an identified list of individuals, institutions or cryptocurrency addresses.

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SUMMARY OF THE MATERIAL TERMS OF THE MERGER

The descriptions below of the material terms of the Merger are intended to be summaries of such terms. Such descriptions do not purport to be complete and are qualified in their entirety by reference to the terms of the agreements themselves.

The Merger Agreement

On November 4, 2021, Quantum, TradeStation and Merger Sub entered into the Merger Agreement providing for the Business Combination, pursuant to which, among other things, the Merger will occur at the Effective Time, with Quantum continuing as the surviving entity and as a wholly owned subsidiary of TradeStation (and therefore ceasing to be a publicly-traded company listed on NYSE), Quantum’s stockholders becoming stockholders of TradeStation and TradeStation becoming a publicly-traded company listed on NYSE.

The Business Combination

The Merger Agreement provides that, upon the terms and subject to the conditions thereof, the following transactions will occur in order to effect the Business Combination:

(i)

On the Closing Date, Quantum and Merger Sub will cause the Merger to be consummated by filing the certificate of merger with the Secretary of State of the State of Delaware in accordance with the applicable provisions of the DGCL.

(ii)

At the Effective Time, in accordance with the DGCL, Merger Sub will merge with and into Quantum, following which the separate corporate existence of Merger Sub will cease, Quantum will continue as the surviving corporation after the Merger and as a wholly owned subsidiary of TradeStation and Quantum’s stockholders shall receive (other than for Excluded Shares), as described in more detail below, TradeStation Shares in exchange for their Quantum Shares. The Merger Agreement contemplates that upon or promptly following completion of the Business Combination Quantum will cease to be a publicly-traded company and TradeStation shall become a publicly-traded company listed on NYSE under the ticker symbol “TRDE.”

(iii)

At the Effective Time, each PIPE Share and each Sponsor Share will be converted into, and the PIPE Investors and the Sponsors shall have the right to receive in respect of each Quantum Share, one TradeStation Share.

(iv)

At the Effective Time, each Quantum Share (other than any Excluded Share, PIPE Share and Sponsor Share) will be converted into, and each holder thereof shall have the right to receive in respect of each Quantum Share, a number of TradeStation Shares equal to the lower of: (A) 1.3727; and (B)(1) the sum of (x) the number of Public Shares outstanding immediately prior to the Closing for which Quantum stockholders have not elected redemption and (y) 750,000, divided by (2) the number of Public Shares outstanding immediately prior to the Closing for which Quantum stockholders have not elected redemption (the “Exchange Ratio”). This formula reflects the up to 750,000 Non-Redemption Bonus Shares TradeStation will be issuing at Closing as an incentive to Public Stockholders not to redeem their Public Shares. (Such 750,000 Non-Redemption Bonus Shares will be delivered as Merger consideration ratably to such Public Stockholders that hold any number of Quantum Shares not redeemed (subject to the cap on the Exchange Ratio described elsewhere in this proxy statement/prospectus)). Public Stockholders will receive between 1.0373 TradeStation Shares (assuming no redemptions) and 1.3727 TradeStation Shares (assuming 90% or more redemptions) for each Quantum Share owned depending on how many Public Shares are redeemed.

(v)

From and after the Effective Time, each of the Quantum stockholders shall cease to have any other rights in and to the Merger Sub or Quantum, in its capacity as the surviving corporation of the Merger, and each certificate, or other indicia, relating to the ownership of Quantum Shares (other than any Excluded Share) shall thereafter represent only the right to receive the applicable portion of the merger consideration, i.e., the number of TradeStation Shares being exchanged for the Quantum Shares.

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(vi)

Each share of common stock of Merger Sub outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable Quantum Share, which shall constitute the only outstanding Quantum Shares and which shall all be owned by TradeStation.

(vii)

Each Quantum Share held in Quantum’s treasury or owned by Quantum, Merger Sub or TradeStation immediately prior to the Effective Time, if any, shall be cancelled and no consideration shall be paid or payable with respect thereto.

(viii)

Notwithstanding anything in the Merger Agreement to the contrary, no fraction of a TradeStation Share will be issued by virtue of the Merger, and any such fractional share (after aggregating all fractional TradeStation Shares that otherwise would be received by a Quantum stockholder) shall be rounded down to the nearest whole share.

The Quantum Board has unanimously (i) approved and declared advisable the Merger Agreement, the Business Combination and the other transactions contemplated thereby and (ii) resolved to recommend approval by the Quantum stockholders of the Merger Agreement and related matters.

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

The following are answers to certain questions that you may have regarding the Merger and the Special Meeting. You should read the remainder of this proxy statement/prospectus carefully because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the annexes to this proxy statement/prospectus.

QUESTIONS AND ANSWERS ABOUT THE MERGER

Q:

WHAT IS THE MERGER?

A:

Quantum, TradeStation and Merger Sub, a wholly owned subsidiary of TradeStation, have entered into the Merger Agreement, providing for, subject to the terms and conditions therein, the Business Combination, pursuant to which, among other things, Merger Sub will merge with and into Quantum, with Quantum continuing as the surviving entity and as a wholly owned subsidiary of TradeStation. As a result of the Merger, Quantum stockholders are to receive, except for shares they have elected to redeem for cash, TradeStation Shares in exchange for their Quantum Shares.

Quantum will hold the Special Meeting to, among other things, obtain the approvals required for the Merger and the other transactions contemplated by the Merger Agreement which require approval, and you are receiving this proxy statement/prospectus in connection with such meeting.

For more information on the Merger Agreement and the Merger, see the section of this proxy statement/prospectus titled “The Merger Agreement.” In addition, a copy of the Merger Agreement is attached as Annex A. You should carefully read this proxy statement/prospectus and the Merger Agreement in their entirety.

Q:

WHY AM I RECEIVING THIS DOCUMENT?

A:

Quantum stockholders are being asked to vote to (1) adopt the Merger and the other transactions contemplated by the Merger Agreement (the “Merger Proposal”), (2) approve, for purposes of complying with applicable listing rules of the NYSE, the issuance of 13,250,000 PIPE Shares in a private offering of securities to the PIPE Investors in connection with the Business Combination, which will occur immediately prior to the Closing with such PIPE Shares converted into an equal number of TradeStation Shares in the Merger, and the issuance by TradeStation, as the successor to Quantum’s obligations under the Subscription Agreements, of up to 4,038,461 Additional Shares following the Closing dependent on the trading price of the TradeStation Shares during the relevant measurement period, and subject to certain other conditions (the “PIPE Proposal”) and (3) adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Merger Proposal or the PIPE Proposal (the “Adjournment Proposal”). See the section of this proxy statement/​prospectus titled “Proposal No. 1 — The Merger Proposal,” “Proposal No. 2 — The PIPE Proposal” and “Proposal No. 3 — The Adjournment Proposal.” This proxy statement/prospectus is sent to help Quantum stockholders decide how to vote their Public Shares with respect to the Merger Proposal, the PIPE Proposal and the Adjournment Proposal.

The Merger cannot be completed unless Quantum stockholders approve the Merger Proposal and the PIPE Proposal set forth in this proxy statement/prospectus. Information about the Special Meeting, the Merger and the other business to be considered by Quantum stockholders at the Special Meeting is contained in this proxy statement/prospectus.

This document constitutes a proxy statement of Quantum and a prospectus of TradeStation. It is a proxy statement because the Quantum Board is soliciting proxies from Quantum stockholders. It is a prospectus because TradeStation, in connection with the Business Combination, is offering TradeStation Shares in exchange for the outstanding Quantum Shares to be converted upon consummation of the Business Combination. See the section of this proxy statement/prospectus titled “The Merger Agreement — Merger Consideration.”

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Q:

WHAT WILL QUANTUM STOCKHOLDERS RECEIVE IN THE BUSINESS COMBINATION?

A:

If the Business Combination is completed, each Quantum Share (other than any Excluded Share, PIPE Share and Sponsor Share) will be converted into, and each holder thereof shall have the right to receive in respect of each Quantum Share, a number of TradeStation Shares equal to the lower of: (A) 1.3727; and (B)(1) the sum of (x) the number of Public Shares outstanding immediately prior to the Closing for which Quantum stockholders have not elected redemption and (y) 750,000, divided by (2) the number of Public Shares outstanding immediately prior to the Closing for which Quantum stockholders have not elected redemption. Each of the PIPE Shares and Sponsor Shares will be converted into, and each holder thereof shall have the right to receive in respect of each such share, one TradeStation Share. Each Quantum Warrant will become a TradeStation Warrant, with each such warrant exercisable for the number of TradeStation Shares that the holder thereof would have received if such warrant had been exercisable and exercised immediately prior to the Merger. Each of the Excluded Shares will be cancelled and no merger consideration shall be paid or payable with respect thereto.

The following table illustrates the consideration (meaning the amount of TradeStation Shares) each Public Stockholder will receive on a per share basis (with respect to Public Shares that have not been redeemed) in three different redemption scenarios, which are: (1) no redemptions (0%), (2) 50% redemptions and (3) 90% redemptions. These are all just examples and no prediction is being made as to what the actual redemption rate would turn out to be. As of March 31, 2022, any Public Stockholder who elects to redeem its Public Shares will receive approximately $10.00 per share.

Cash & Stock Merger Consideration per Share	Assuming no redemptions		Assuming 50% redemptions			Assuming 90% redemptions
Quantum Stockholders Who Choose Not to Redeem	​	​	​	​	​	​	​	​
Per share cash consideration	​	—	​	​	—	​	​	—
Per share stock consideration	​	1.0373	​	​	1.0745	​	​	1.3727
Quantum Stockholders Who Choose to Redeem	​	​	​	​	​	​	​	​
Per share cash consideration	​	—	​	$	10.00	​	$	10.00
Per share stock consideration	​	—	​	​	—	​	​	—

Q:

WHAT ARE THE NON-REDEMPTION BONUS SHARES AND WHAT IS THEIR PURPOSE?

A:

The Non-Redemption Bonus Shares are a pool of 750,000 shares that TradeStation will be issuing at Closing as an incentive to Public Stockholders not to redeem their Public Shares (subject to the cap on the Exchange Ratio described elsewhere in the proxy statement/prospectus). The way this incentive works is that the Public Stockholders will receive between 1.0373 TradeStation Shares (assuming no redemptions) and 1.3727 TradeStation Shares (assuming 90% or more redemptions) for each Quantum Share owned depending on how many Public Shares are redeemed.

Q:

WHAT WILL THE OWNERSHIP OF TRADESTATION SHARES BE UPON COMPLETION OF THE BUSINESS COMBINATION?

A:

Upon consummation of the Business Combination, the Quantum stockholders will become TradeStation stockholders and TradeStation’s sole stockholder prior to the Closing, Monex, will remain a TradeStation stockholder. Monex is not selling any of the TradeStation Shares it owns today as part of, or in connection with, the Business Combination, and Monex will be acquiring an additional 5.0 million TradeStation Shares in its PIPE Investment. Monex’s percentage of ownership of TradeStation at Closing will vary based on the level of redemptions by Public Stockholders. If there are no redemptions of Public Shares, Monex will own 80.93% of the issued and outstanding TradeStation Shares at Closing, which could increase up to 83.77% if the Monex Earn Out Shares and Sponsor Earn Out Shares become vested, and, if all of the Public Shares are redeemed, Monex will own 92.53%, which could increase up to 93.45% if the Monex Earn Out Shares and Sponsor Earn Out Shares become vested.

The following table illustrates the varying ownership amounts and percentages for TradeStation after the Business Combination under three scenarios: one with no redemptions by Public Stockholders,

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one with 50% redemptions by Public Stockholders and one with maximum redemptions by Public Stockholders. In addition, the ownership percentages below are based on the assumption that there are no adjustments for the outstanding Quantum Warrants issued in connection or concurrently with Quantum’s IPO, as such securities are not exercisable until the later of February 9, 2022 and the Closing. Further, there are no adjustments for the up to (i) 948,894 TradeStation Shares to be delivered as Sponsor Earn Out Shares and (ii) 33,998,232 TradeStation Shares to be delivered as Monex Earn Out Shares, because the Sponsor Earn Out Shares and the Monex Earn Out Shares will only be delivered in whole or in part following the Closing contingent upon the occurrence of Triggering Event I, Triggering Event II or a change in control of TradeStation where the per share consideration is equal to or greater than certain thresholds.

​

As of March 31, 2022(1)

​

Assuming no redemptions

Assuming 50% redemptions

Assuming 100% redemptions

​

Shares

%

Shares

%

Shares

%

Quantum stockholders (including the Sponsors)(2)

​

23,496,802

​

14.1

​

13,434,302

​

8.6

​

2,621,802

​

1.8

Monex Shares (excludes 5 million Monex PIPE Shares)(3)

​

129,750,000

​

77.9

​

129,750,000

​

82.9

​

129,750,000

​

89.1

PIPE Shares (includes 5 million Monex PIPE Shares)(4)

​

13,250,000

​

8.0

​

13,250,000

​

8.5

​

13,250,000

​

9.1

Total TradeStation Shares outstanding at the Closing (excluding Monex Earn Out Shares and Sponsor Earn Out Shares)(5)

​

166,496,802

​

100.0

​

156,434,302

​

100.0

​

145,621,802

​

100.0

Sponsor Earn Out Shares

​

948,894

​

​

​

948,894

​

​

​

948,894

​

​

Monex Earn Out Shares

​

33,998,232

​

​

​

33,998,232

​

​

​

33,998,232

​

​

Total TradeStation Shares outstanding at the Closing (including Monex Earn Out Shares and Sponsor Earn Out Shares)(6)

​

201,443,928

​

​

​

191,381,428

​

​

​

180,568,928

​

​

(1)

The figures in the above table are presented only as illustrative examples and are based on the assumptions described above, which may be different from the actual amount of redemptions in connection with the Business Combination. See “Unaudited Pro Forma Condensed Combined Financial Information.”

(2)

Includes 750,000 Non-Redemption Bonus Shares to be issued in the aggregate to Public Stockholders who have elected not to redeem their Quantum Shares. Such 750,000 Non-Redemption Bonus Shares will be delivered as Merger consideration ratably to such Public Stockholders that hold any number of Quantum Shares not redeemed (subject to the cap on the Exchange Ratio described elsewhere in this proxy statement/prospectus).

(3)

“Monex Shares” do not include Monex’s $50 million PIPE Investment for which it will receive an additional 5 million TradeStation Shares. Combining Monex’s PIPE Shares with Monex Shares results in Monex ownership of 80.93% assuming no redemptions, 86.14% assuming 50% redemptions and 92.53% assuming max redemptions. Monex’s ownership could increase up to 93.45% if the Monex Earn Out Shares and Sponsor Earn Out Shares become vested.

(4)

“PIPE Shares” include the 5 million TradeStation Shares Monex will receive for its $50 million PIPE Investment.

(5)

Excludes any grants or vesting of restricted stock units or performance stock units pursuant to the Omnibus Incentive Plan, including those described in the Executive Agreements with each of TradeStation’s named executive officers.

(6)

Excludes up to 4,038,462 Additional Shares that the PIPE Investors (other than Monex) may be entitled to after the Closing based on the trading price of TradeStation Shares during the relevant measurement period and subject to certain other conditions, as well as TradeStation shares underlying

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the Private Warrants and the Public Warrants. See “Unaudited Pro Forma Condensed Pro Forma Condensed Combined Financial Information — Ownership” for the effect of these other potential sources of dilution.

Q:

WHAT ARE SPONSOR SHARES?

A:

Sponsor Shares are fully vested Quantum Shares that were issued to the Sponsors prior to Quantum’s IPO, 5,031,250 of which are currently outstanding (the same number that were outstanding on the date of the Merger Agreement), broken down as follows: (i) Sponsor Holdco, 3,796,335 shares; (ii) Chardan, 949,084 shares; and (iii) the seven directors (some of whom are also executive officers) of Quantum as a group, 285,831 shares (40,833 shares each). However, notwithstanding that there are 5,031,250 fully vested Sponsor Shares currently outstanding, Sponsor HoldCo and Chardan have agreed that at Closing (1) they will forfeit for no consideration a total of 1,460,554 Quantum Shares and (2) a total of 948,894 Quantum Shares held by Sponsor HoldCo and Chardan will be Sponsor Earn Out Shares. This means that, at the Effective Time, the number of fully vested Sponsor Shares will have been reduced by approximately 48%, from 5,031,250 fully vested shares to 2,621,802 fully vested shares.

Sponsor Shares held by Sponsor HoldCo and Chardan will also be subject to a lock-up for a period of up to 12 months after the Closing Date, and Sponsor Shares held by the directors and officers of Quantum will be subject to a lock-up for a period of up to six months after the Closing Date, in each case pursuant to the Sponsor Support Agreement. For more information about the Sponsor Support Agreement, see the section of this proxy statement/prospectus titled “Agreements Entered Into in Connection with the Merger Agreement — Sponsor Support Agreement.”

Q:

WHAT ARE THE CONDITIONS TO COMPLETION OF THE BUSINESS COMBINATION?

A:

There are a number of closing conditions in the Merger Agreement, including, but not limited to, (i) Quantum stockholders having approved the Merger Proposal and the PIPE Proposal, (ii) the approval for listing on the NYSE of the TradeStation Shares and (iii) accuracy of TradeStation and Quantum’s representations and warranties and their compliance with their respective covenants in the Merger Agreement, subject to specified materiality thresholds as described in more detail later in this proxy statement/prospectus. For a summary of the conditions that must be satisfied or waived prior to the Closing, see the section of this proxy statement/prospectus titled “The Merger Agreement — Closing Conditions.”

Q:

WHEN WILL THE BUSINESS COMBINATION BE COMPLETED?

A:

Quantum and TradeStation currently expect that the Business Combination will be completed during the first half of 2022. Neither Quantum nor TradeStation can assure you when, or if, the Business Combination will be completed and it is possible that factors outside of the control of both companies could result in the Business Combination being completed at a different time or not at all. Quantum must first obtain the approval of Quantum stockholders for each of the proposals set forth in this proxy statement/prospectus for their approval, and Quantum and TradeStation must also first satisfy other closing conditions. See the section of this proxy statement/prospectus titled “The Merger Agreement — Closing Conditions.”

Q:

WHAT HAPPENS TO THE FUNDS DEPOSITED IN THE TRUST ACCOUNT AFTER CONSUMMATION OF THE BUSINESS COMBINATION?

A:

A total of $201,250,000 from a portion of the net proceeds of the sale of the Quantum Units in Quantum’s IPO (including the proceeds of the sale of additional Quantum Units resulting from the full exercise of the underwriters’ over-allotment option) and a portion of the proceeds of the concurrent sale of the Private Warrants were deposited in the Trust Account immediately following the IPO. In connection with the consummation of the Business Combination, the funds in the Trust Account will be used to (i) pay Public Stockholders who properly demand redemption of their Public Shares a pro rata portion of the Trust Account, (ii) pay fees and expenses incurred in connection with the Business Combination (including aggregate fees of approximately $7,043,750 to Chardan Capital Markets as a marketing fee) and (iii) help fund TradeStation’s plans to accelerate account and revenue growth and add liquidity to support an anticipated larger customer base.

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Q:

WHAT HAPPENS IF THE BUSINESS COMBINATION IS NOT COMPLETED?

A:

If Quantum does not complete the Business Combination with TradeStation for any reason, Quantum would search for another target business with which to complete a business combination. If Quantum does not complete the Business Combination with TradeStation and does not complete an initial business combination with another target business by the Outside Date, Quantum must redeem 100% of the outstanding Public Shares, at a per share price, payable in cash, equal to the amount then held in the Trust Account divided by the number of outstanding Public Shares. The Sponsors have no redemption rights in the event a business combination is not effected in the required time period and, accordingly, the Sponsor Shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to Quantum Warrants. Accordingly, such warrants will expire worthless. Furthermore, if the Business Combination is not completed, TradeStation will remain a privately-held independent company. See the section of this proxy statement/prospectus titled “The Merger Agreement — Termination; Effectiveness” and “Risk Factors.”

Q:

CAN QUANTUM OR TRADESTATION SEEK AN ALTERNATE TRANSACTION?

A:

Pursuant to the Merger Agreement, TradeStation has agreed to not, and to direct its representatives to not, (i) initiate any negotiations with any person with respect to certain alternative transactions, (ii) enter into an agreement with respect to any such alternative transactions or proposed transactions or (iii) otherwise knowingly facilitate any inquiries, proposals, discussions, or negotiations or any effort or attempt by any person to make a proposal with respect to any such alternative transaction. Similarly, Quantum has agreed pursuant to the Merger Agreement to not, and not permit its representatives to, (i) make any proposal or offer that constitutes a Business Combination Proposal, (ii) initiate any discussions or negotiations with any person with respect to a Business Combination Proposal or (iii) enter into any acquisition agreement, business combination, merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement relating to a Business Combination Proposal. See the section of this proxy statement/prospectus titled “The Merger Agreement.”

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING

Q:

WHAT AM I BEING ASKED TO VOTE ON AND WHY IS THIS APPROVAL NECESSARY?

A:

Quantum stockholders are being asked to vote on the following proposals:

1.

the Merger Proposal;

2.

the PIPE Proposal; and

3.

the Adjournment Proposal (if necessary).

Consummation of the Business Combination is conditioned on the approval of the Merger Proposal and the PIPE Proposal. If any of these proposals is not approved, Quantum and TradeStation will not consummate the Business Combination.

Q:

WHY IS QUANTUM PROPOSING THE MERGER?

A:

Quantum was organized as a special purpose acquisition company, or SPAC, the sole purpose of which is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

Since the IPO, Quantum’s activity has been limited to the evaluation of business combination candidates. After evaluating several business combination candidates, Quantum decided to pursue a business combination with TradeStation.

TradeStation provides a multi-asset trading platform on desktop, web and mobile as a self-clearing online broker for the equities, options, futures and cryptocurrency self-directed investor markets. Based on its due diligence investigations of TradeStation and the industry in which it operates, including the financial and other information provided by TradeStation in the course of its negotiations in connection

17

with the Merger Agreement, Quantum believes that TradeStation has attractive growth opportunities, a strong value proposition to the market and its customers, a compelling risk-reward profile and a strong management team, and that the Business Combination, specifically the infusion of additional capital it will provide, should improve TradeStation’s ability to grow.

See the section of this proxy statement/prospectus titled “Proposal No.1 — The Merger Proposal — Recommendation of the Quantum Board of Directors and Reasons for the Business Combination.”

Q:

DID THE QUANTUM BOARD OBTAIN A THIRD-PARTY VALUATION OR FAIRNESS OPINION IN DETERMINING WHETHER OR NOT TO PROCEED WITH THE BUSINESS COMBINATION?

A:

The Quantum Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. Quantum’s officers, directors and advisors have substantial experience in evaluating the operating and financial merits of companies from a wide range of financial technologies and financial services industries and concluded that their experience and backgrounds, together with the experience and sector expertise of Quantum’s financial advisors, enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, Quantum’s officers, directors and advisors have substantial experience with mergers and acquisitions. Accordingly, investors may be relying on the judgment of the Quantum Board and the financial analyses, which included a comparable company analysis and a discounted cash flow analysis, conducted by Quantum’s management, with the assistance of its financial advisor, at the time of approval of the Business Combination, in valuing TradeStation’s business without the benefit of a fairness opinion or similar third-party opinion or analysis. For a more extensive discussion of the analyses utilized by the Quantum Board in valuing TradeStation’s business and approving the Business Combination, see the section of this proxy statement/prospectus titled “Proposal No. 1 — The Merger Proposal —  Recommendation of the Quantum Board and Reasons for the Business Combination — Financial Analysis.”

Q:

DO I HAVE REDEMPTION RIGHTS?

A:

If you are a holder of Public Shares, you do have redemption rights. You have the right to require Quantum to redeem your shares for a pro rata portion of the cash held in the Trust Account, regardless of whether you vote and if you do vote regardless of whether you vote for or against the Merger Proposal.

Notwithstanding the foregoing, a holder of Public Shares, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” ​(as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption with respect to more than 20% of the Public Shares. Accordingly, all Public Shares in excess of 20% held by a Public Stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed.

Q:

HOW AND WHEN DO I EXERCISE MY REDEMPTION RIGHTS, IF THAT IS WHAT I DECIDE I WANT TO DO?

A:

Irrespective of whether you, as a holder of Public Shares, vote for or against the Merger Proposal, you may demand that Quantum redeem your Public Shares, in whole or in part (meaning you may elect to redeem all or a portion of your Public Shares), for cash if the Business Combination is consummated. You will be entitled to receive cash for these shares only if, no later than 5:00 p.m. (New York City time) on           , 2022 (two business days prior to the date of the Special Meeting), you:

(i)

submit a written demand to Quantum’s transfer agent that Quantum redeem your Public Shares for cash (specifying the number of your Public Shares you wish to have redeemed);

(ii)

certify in such written request for redemption that you “ARE” or “ARE NOT” seeking to redeem more than an aggregate of 20% of the Public Shares together with your affiliates or any Person(s) with whom you are acting in concert or as a “group” ​(as defined in Section 13(d)(3) of the Exchange Act); and

18

(iii)

deliver your Public Shares to Quantum’s transfer agent (physically or electronically).

If the Business Combination is not consummated, your Public Shares will not be redeemed in connection with this transaction.

If the Business Combination is consummated and you, as a holder of Public Shares, properly demand redemption of your Quantum Shares, Quantum will redeem each such Public Share you have requested be redeemed for a full pro rata portion of the Trust Account, calculated as of two (2) business days prior to the consummation of the Business Combination. If you, as a holder of Public Shares, redeem your Public Shares you may retain all Public Warrants you hold. As a holder of Public Shares, you may elect to redeem without voting, and if you do vote, irrespective of whether you vote for or against the Merger Proposal.

Any request for redemption, once made by a holder of Public Shares, may be withdrawn at any time up to the time the vote is taken with respect to the Merger Proposal at the Special Meeting. If you deliver your shares for redemption to Quantum’s transfer agent and later decide prior to the Special Meeting not to elect redemption, you may request that Quantum’s transfer agent return the shares (physically or electronically). If such request is received after the Special Meeting and the vote is taken with respect to the Merger Proposal at the Special Meeting, Quantum will have the option of whether to honor such request or to redeem your Public Shares.

Any corrected or changed proxy card or written demand of redemption rights must be received by Quantum’s transfer agent prior to the vote taken on the Merger Proposal at the Special Meeting. No demand for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to the transfer agent prior to the vote at the Special Meeting.

If a demand is properly made as described above, then, if the Business Combination is consummated, Quantum will redeem these shares for a pro rata portion of funds deposited in the Trust Account. If you exercise your redemption rights, then you will be exchanging your Public Shares for cash.

Q:

WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE BUSINESS COMBINATION?

A:

There are significant factual and legal uncertainties as to whether the Business Combination qualifies as a reorganization within the meaning of Section 368(a) of the Code, and therefore the tax treatment of the Business Combination is inherently uncertain. If, as of the Closing Date, any requirement for Section 368(a) of the Code is not met, then a U.S. Holder (as defined below under “Certain U.S. Federal Income Tax Considerations”) may recognize gain or loss in an amount equal to the difference, if any, between the fair market value (as of the Closing Date) of the securities received in the Merger, over such U.S. Holder’s aggregate tax basis in the securities surrendered by such U.S. Holder in the Merger.

The tax consequences of the Business Combination are complex and will depend on your particular circumstances. U.S. Holders of Quantum securities (as defined below under “Certain U.S. Federal Income Tax Considerations”) are urged to consult their own tax advisors to determine the tax consequences of the Business Combination. Please also see “Risk Factors — Risks Related to the Business Combination  —  If the Business Combination does not qualify as a reorganization under Section 368(a) of the Code, then the Business Combination generally would be taxable with respect to U.S. Holders.”

Q:

DO I HAVE APPRAISAL RIGHTS IF I OBJECT TO THE PROPOSED BUSINESS COMBINATION?

A:

TradeStation Shares issued as merger consideration will be listed on a national securities exchange at Closing. As a result, neither Quantum stockholders nor Quantum Warrant holders have appraisal rights in connection with the Business Combination under the DGCL.

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Q:

WHAT HAPPENS IF THE MERGER PROPOSAL IS APPROVED BUT A SUBSTANTIAL NUMBER OF PUBLIC STOCKHOLDERS, INCLUDING MANY WHO HAVE VOTED IN FAVOR OF THE MERGER, EXERCISE THEIR REDEMPTION RIGHTS?

A:

Public Stockholders may vote in favor of the Merger Proposal and still exercise their redemption rights. This means that the Business Combination may be approved and consummated even if the funds available from the Trust Account and the number of Quantum stockholders are substantially reduced as a result of a vast majority of the Public Shares being redeemed by the Public Stockholders. With fewer publicly held shares and fewer public stockholders, the trading market for TradeStation Shares will be less liquid, TradeStation may not be able to meet, or continue to meet, the listing standards of the NYSE, and, with less funds available from the Trust Account the capital infusion into TradeStation’s business will be reduced, providing less funds to TradeStation to support its business growth strategy.

Q:

HOW DO THE SPONSORS INTEND TO VOTE ON THE PROPOSALS?

A:

The Sponsors are the holders of record and beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) and are entitled to vote approximately 20% of the outstanding Quantum Shares. The Sponsors have agreed to vote any Sponsor Shares and any Public Shares held by them as of the Quantum Record Date for the Special Meeting in favor of the proposals. See the section of this proxy statement/prospectus titled “Agreements Entered Into in Connection with the Merger Agreement —  Sponsor Support Agreement.”

Q:

WHAT CONSTITUTES A QUORUM AT THE SPECIAL MEETING?

A:

A majority of the voting power of the issued and outstanding Quantum Shares, which is 12,578,126 Quantum Shares, present at the Special Meeting by virtual attendance or by proxy and entitled to vote is required to constitute a quorum and to conduct business at the Special Meeting. A vote to “ABSTAIN” from voting shares represented at the meeting by virtual attendance or by proxy on one or more of the proposals in this proxy statement/prospectus will count as present for the purposes of establishing a quorum. Broker Non-Votes will not count as present for the purposes of establishing a quorum. In the absence of a quorum, the chairman of the Special Meeting may adjourn the Special Meeting.

Q:

WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE SPECIAL MEETING?

A:

The Merger Proposal:   The approval of the Merger Proposal requires the affirmative vote of a majority of the outstanding Quantum Shares. The Sponsors have agreed to vote any Sponsor Shares and any Public Shares held by them in favor of the Merger Proposal. As of the Quantum Record Date, the Sponsors collectively held 5,031,250 Sponsor Shares and 901 Public Shares. As a result, as of the Quantum Record Date, in addition to the Sponsor Shares and Public Shares held by the Sponsors, Quantum would need 7,545,975, or over approximately 37.5%, of the 20,125,000 Public Shares to be voted in favor of the Merger Proposal in order to have the Merger Proposal approved.

The PIPE Proposal:   The approval of the PIPE Proposal requires the affirmative vote of the majority of the votes cast by holders of outstanding Quantum Shares present at the Special Meeting by attendance via the virtual meeting website or by proxy and entitled to vote thereon. The Sponsors have agreed to vote any Sponsor Shares and any Public Shares held by them in favor of the Merger Proposal. As of the Quantum Record Date, the Sponsors collectively held 5,031,250 Sponsor Shares and 901 Public Shares. As a result, in addition to the Sponsor Shares and Public Shares held by the Sponsors, Quantum would need 7,545,975, or over approximately 37.5%, of the 20,125,000 Public Shares, as of the Quantum Record Date, to be voted in favor of the PIPE Proposal (assuming all issued and outstanding shares are voted) in order to have the PIPE Proposal approved.

The Adjournment Proposal (if necessary):   The approval of the Adjournment Proposal requires the affirmative vote of the majority of the votes cast by holders of outstanding Quantum Shares present at the Special Meeting by virtual attendance or by proxy and entitled to vote thereon. The Sponsors have agreed to vote any Sponsor Shares and any Public Shares held by them in favor of the Merger Proposal. As of the Quantum Record Date, the Sponsors collectively held 5,031,250 Sponsor Shares and 901 Public Shares. As a result, in addition to the Sponsor Shares and Public Shares held by the Sponsors, Quantum would need 7,545,975, or over approximately 37.5%, of the 20,125,000 Public Shares,

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as of the Quantum Record Date, to be voted in favor of the Adjournment Proposal (assuming all issued and outstanding shares are voted) in order to have the Adjournment Proposal approved.

Q:

DO ANY OF QUANTUM’S DIRECTORS OR OFFICERS OR THE SPONSORS HAVE INTERESTS IN THE BUSINESS COMBINATION THAT MAY DIFFER FROM, OR BE IN ADDITION TO, THE INTERESTS OF PUBLIC STOCKHOLDERS?

A:

The Sponsors as well as the Sponsors’ and Quantum’s officers and directors may have interests in the Business Combination that may be different from, or in addition to, the interests of Public Stockholders generally. These interests may cause the Sponsors and the directors and executive officers of the Sponsors or Quantum to view the Merger Proposal and the other proposals differently than Quantum’s Public Stockholders generally may view them. The Quantum Board was aware of and considered these interests to the extent such interests existed at the time, among other matters, in approving the Merger Agreement and the Merger and in recommending that the Merger Proposal and other proposals be approved by Quantum’s stockholders. See the section of this proxy statement/prospectus titled “Proposal No. 1 — The Merger Proposal — Interests of Quantum’s Directors and Officers and the Sponsors in the Business Combination.”

Q:

WHAT DO I NEED TO DO NOW?

A:

After carefully reading and considering the information contained in this proxy statement/prospectus, please submit your proxies as soon as possible so that your shares will be represented at the Special Meeting. Please follow the instructions set forth on the proxy card or on the voting instruction form provided by your broker, bank or other nominee if your shares are held in the name of your broker, bank or other nominee.

Q:

HOW DO I VOTE?

A:

If you are a Quantum stockholder of record as of the Quantum Record Date, which is           , 2022, you may submit your proxy before the Special Meeting in any of the following ways:

(i)

use the toll-free number shown on your proxy card;

(ii)

visit the website shown on your proxy card to vote via the Internet; or

(iii)

complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.

If you are a Quantum stockholder of record as of the Quantum Record Date, you may also vote online during the Special Meeting or any adjournment thereof by accessing https://           .

If your shares are held in “street name” through a broker, bank or other nominee, your broker, bank or other nominee will send you separate instructions describing the procedure for voting your shares. If you are a “street name” stockholder who wishes to participate in the Special Meeting you will need to obtain a proxy form from your broker, bank or other nominee and email a copy (a legible photograph is sufficient) of your legal proxy to           .

Q:

HOW DO I REGISTER TO PARTICIPATE IN THE SPECIAL MEETING?

A:

To register for the virtual Special Meeting, please follow these instructions:

If your shares are registered in your name with Quantum’s transfer agent and you wish to participate in the Special Meeting, go to https://​           , enter the control number you received on your proxy card and click on “Click here” to preregister for the online meeting link at the top of the page. Just prior to the start of the Special Meeting, you will need to log back into the meeting site using your 16-digit control number. Pre-registration is recommended but is not required in order to attend.

If you are a beneficial holder who wishes to participate in the Special Meeting, you must obtain a legal proxy by contacting your account representative at the bank, broker or other nominee that holds your shares and email a copy (a legible photograph is sufficient) of your legal proxy to           . Beneficial holders who email a valid legal proxy will be issued a meeting control number that will allow them to register to attend and participate in the Special Meeting. After contacting Quantum’s transfer

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agent, a beneficial holder will receive an email prior to the Special Meeting with a link and instructions for entering the virtual meeting. Beneficial holders should contact Quantum’s transfer agent at least five business days prior to the Special Meeting date.

Q:

HOW DO I ACCESS THE SPECIAL MEETING WEBSITE?

A:

You will need your control number for access. If you do not have your control number, contact           at the phone number or email address below. Beneficial owners who hold shares through a bank, broker or other intermediary will need to contact them and obtain a legal proxy. Once you have your legal proxy, contact Continental Stock Transfer & Trust Company to have a control number generated.           ’s contact information is as follows:           or email           .

Q:

IF MY SHARES ARE HELD IN “STREET NAME” BY A BROKER, BANK OR OTHER NOMINEE, WILL MY BROKER, BANK OR OTHER NOMINEE VOTE MY SHARES FOR ME?

A:

If your shares are held in “street name” in a stock brokerage account or by a broker, bank or other nominee, you must provide such record holder of your shares with instructions on how to vote your shares.

Please follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote shares held in “street name” by returning a proxy card directly to Quantum or by voting in person at the Special Meeting (or by virtual attendance thereof) unless you provide a “legal proxy,” which you must obtain from your broker, bank or other nominee. In addition to such legal proxy, if you wish to participate in the Special Meeting and vote online during the Special Meeting, but are not a stockholder of record because you hold your shares in “street name,” obtain a legal proxy from your broker, bank or other nominee and email a copy (a legible photograph is sufficient) of your legal proxy to           .

Your broker, bank or other nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. Quantum believes all of the proposals presented to Quantum stockholders at the Special Meeting will be considered non-discretionary and, therefore, your broker, bank or other nominee cannot vote your shares without your instruction on any of the proposals presented at the Special Meeting.

If you are a Quantum stockholder holding your shares in “street name” and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee will not vote your shares on the Merger Proposal, the PIPE Proposal or the Adjournment Proposal. Such Broker Non-Votes will have the same effect as a vote “AGAINST” the Merger Proposal but will have no effect on the PIPE Proposal or the Adjournment Proposal. Your broker, bank or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker, bank or other nominee to vote your shares in accordance with directions you provide.

Q:

WHAT IF I ABSTAIN OR DO NOT VOTE?

A:

If you are a Quantum stockholder and you fail to return your proxy card and do not vote online during the Special Meeting it will have the same effect as a vote “AGAINST” the Merger Proposal, but will have no effect on the PIPE Proposal or the Adjournment Proposal (if necessary). If you vote to “ABSTAIN” from voting your shares either online during the Special Meeting or by proxy on one or more of the proposals, it will have the same effect as a vote “AGAINST” the Merger Proposal but will have no effect on the PIPE Proposal and the Adjournment Proposal (if necessary), as applicable, other than reducing the total number of shares counted to determine if a majority of the voting power of the shares voted in favor of the applicable proposal.

Q:

WHAT WILL HAPPEN IF I RETURN MY PROXY CARD WITHOUT INDICATING HOW TO VOTE?

A:

If you sign and return your proxy card without indicating how to vote on any particular proposal, the Quantum Shares represented by your proxy will be voted as recommended by the Quantum Board with respect to that proposal.

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Q:

MAY I CHANGE MY VOTE AFTER I HAVE DELIVERED MY PROXY OR VOTING INSTRUCTION CARD?

A:

Yes. You may change your vote at any time before your proxy is voted at the Special Meeting. You may do this in one of three ways:

(i)

timely filing a notice with the corporate secretary of Quantum;

(ii)

timely mailing a new, subsequently-dated proxy card; or

(iii)

by participating in the Special Meeting and voting online during the Special Meeting.

If you are a stockholder of record of Quantum and you choose to send a written notice or to mail a new proxy, you must submit your notice of revocation or your new proxy to Quantum, and it must be received before the vote is taken at the Special Meeting. Any proxy that you submitted may also be revoked by submitting a new proxy by mail, or online or by telephone, not later than           on           , 2022 or by participating in the Special Meeting and voting online during the Special Meeting. Simply participating in the Special Meeting will not revoke your proxy. If you have instructed a broker, bank or other nominee to vote your Quantum Shares, you must follow the directions you receive from your broker, bank or other nominee in order to change or revoke your vote.

Q:

WHAT HAPPENS IF I FAIL TO TAKE ANY ACTION WITH RESPECT TO THE SPECIAL MEETING?

A:

If you fail to take any action with respect to the Special Meeting and the Merger is approved by stockholders and consummated and you have not properly demanded redemption of all of your Quantum Shares, you will become a stockholder of TradeStation. If you fail to take any action with respect to the Special Meeting and the Merger is not approved, you will continue to be a stockholder of Quantum while Quantum searches for another target business with which to complete a business combination.

Q:

WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?

A:

Quantum stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered under more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your shares.

Q:

WHOM SHOULD I CONTACT IF I HAVE ANY QUESTIONS ABOUT THE PROXY MATERIALS OR VOTING?

A:

If you have any questions about the proxy materials, need assistance submitting your proxy or voting your shares or need additional copies of this proxy statement/prospectus or the enclosed proxy card, you should contact           , the proxy solicitation agent for Quantum, toll-free at           .

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the Special Meeting, including the Merger, you should read this entire document carefully, including the Merger Agreement attached as Annex A to this proxy statement/prospectus. The Merger Agreement is the legal document that governs the Merger and share exchange and the other transactions that will be undertaken in connection with the Merger. It is also described in detail in this proxy statement/prospectus in the section of this proxy statement/prospectus titled “The Merger Proposal — The Merger Agreement.”

Information About the Companies

TradeStation

TradeStation, a Florida corporation, offers to self-directed traders and investors an award-winning trading platform with broad multi-asset capabilities that is supported by its execution, self-clearing and other online brokerage services in the equities, options, futures and cryptocurrency markets. Equities and futures accounts, in which a customer can trade stocks, ETFs and equity options (equities accounts), and commodity futures and options on futures (futures accounts), are offered by TradeStation Securities, as an SEC-licensed broker-dealer and CFTC-licensed FCM, respectively. Cryptocurrency accounts, in which a customer can trade cryptocurrencies such as Bitcoin and Ethereum, are offered by TradeStation Crypto as a regulated money services business registered with the Financial Crimes Enforcement Network and numerous state agencies which regulate money transmitter, money services and digital currencies businesses. TradeStation Crypto is not a licensed securities broker-dealer or FCM.

TradeStation was founded in 1982 as a trading software company, focused on charting analytics and functionality that enabled customers to design, back-test, optimize and automate custom trading strategies. In 2001, Tradestation added its online broker platform, offering equities and futures accounts, supported by numerous, award-winning analysis functions and features. Historically, TradeStation focused on the seasoned, active trader, but over the past several years has expanded its offerings to address the wider self-directed investor market, including the younger generation of Millennial and Gen-Z traders. In particular, TradeStation has enhanced its offerings during the past few years by substantially enriching and improving its Web and mobile offerings, launching its cryptocurrency brokerage platform, simplifying its pricing plans and offering commission-free stock trading, enhancing its account opening process, including offering real-time account funding, adding new learning content and features and launching a new website.

TradeStation’s proprietary technology for its core equities, options and futures platform is available on desktop, Web and mobile, and its cryptocurrency platform is available on Web and mobile. TradeStation connects directly to stock and futures exchanges and other electronic markets, as well as cryptocurrency markets, for both market data distribution to its customers and trade order placement, and also executes and self-clears its customers’ equities, options, futures and cryptocurrency trades and has custody of customer cash and other assets. Self-clearing for equities and futures account transactions, as performed by TradeStation Securities, is executed through its clearing memberships in applicable exchanges and clearinghouses, in centralized clearing environments regulated by the SEC and CFTC, and subject to stringent rules with respect to the maintenance of net capital and clearinghouse deposits by securities broker-dealers and FCMs and several other financial requirements. Self-clearing for cryptocurrency account transactions, as performed by TradeStation Crypto, is not executed in a centralized environment or subject to regulated exchange or clearinghouse requirements. Self-clearing for cryptocurrency accounts refers to the facilitation by TradeStation Crypto of the execution, confirmation and settlement of its customers’ transactions through maintaining custody of its customers’ assets, connections to liquidity providers against which it can match its customers’ orders, and the processing of and back-office accounting for its customers’ transactions and account activity. Such activities require TradeStation Crypto to comply with money transmitter, money services business and similar state license requirements, including permissible investments of customer assets and minimum net worth and similar financial requirements, which vary from state to state. TradeStation believes owning its core technology, together with the direct market connectivity, execution, self-clearing and custody arrangements it offers, may give TradeStation economies of scale and flexibility to profitably achieve growth.

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In addition to having enriched and improved TradeStation’s Web and mobile offerings, which appear to be preferred by the growing market of younger self-directed investors, TradeStation has developed and implemented API technology that enables it to quickly connect with third-party platforms in various fintech and other investment-related financial services industries. TradeStation has recently begun to leverage, and plans to increasingly leverage, these API-centered relationships to attract and retain customers who may prefer to access its brokerage service environment from other online communities and applications, as well as to expand its marketing leads through online referrals which connect directly to its account opening process.

TradeStation launched its online brokerage in 2001 and its awards and accolades over the past two decades are numerous. In the 2022 Online Broker Review conducted by StockBrokers.com, TradeStation was rated #1 Platform Technology for the tenth consecutive year, and “Best in Class” for “Active Trading” (12th year in a row), “Platform & Tools” ​(11th year in a row), “Options Trading” ​(10th year in a row), “Commissions and Fees” ​(3rd year in a row) and “Futures Trading” ​(3rd year in a row). In the Stocks & Commodities Reader’s Choice Awards, TradeStation has been voted best “Trading System — Futures” 16 times, best “Trading Systems — Stocks” 15 times, best “Real-Time Data” 11 times, and best “Trading Centers/​Schools/Training” 5 times. NerdWallet’s 2022 Best-Of Awards recognized TradeStation (in a two-way tie) as the “Best Online Broker for Stock Trading Platform and Research.”

TradeStation launched its cryptocurrency brokerage offering, on a limited basis, in November 2019, and the first marketing campaign for cryptocurrency accounts was launched in the spring of 2020. Stockbrokers.com named TradeStation #1 Crypto Technology for the second year in a row in its 2022 Online Broker Review and “Best Online Broker for Bitcoin Trading” in 2020. TradeStation’s cryptocurrency platform won “Best New Product” at Benzinga’s 2020 Global Fintech Awards and was named as a finalist for “Best Software for Trading Cryptocurrency” in Benzinga’s 2021 Global Fintech Awards. For fiscal 2022, total revenues generated by this business (trading-related revenue and net interest income related to TradeStation’s cryptocurrency operations) were 1.1% of TradeStation’s total net revenues, and trading-related revenue was 3.1% of TradeStation’s total trading-related revenue.

TradeStation grew total customer accounts from approximately 108,000 at the end of fiscal 2020, to 146,000 at the end of fiscal 2021, to 181,000 at the end of fiscal 2022. TradeStation’s total customer assets grew from approximately $5.4 billion at March 31, 2020, which included approximately $2 million of customer cryptocurrency assets, to approximately $12.0 billion at March 31, 2022, which included approximately $344 million of customer cryptocurrency assets at fair value.

TradeStation’s total net revenues were $188.6 million in fiscal 2020, $218.7 million in fiscal 2021, and $ 209.6 million in fiscal 2022. TradeStation had pre-tax income of $12.4 million in fiscal 2020 and $32.6 million in fiscal 2021, and a pre-tax loss of $39.1 million in fiscal 2022. TradeStation’s Adjusted EBITDA was $41.9 million in fiscal 2020 and $53.6 million in fiscal 2021, and negative $26.2 million in fiscal 2022. While approximately 20% of TradeStation’s customer accounts are held by customers who reside outside of the U.S., TradeStation focuses principally on serving online traders in the U.S. See “TradeStation’s Summary Historical Financial and Operating Data” for information about Adjusted EBITDA, including a reconciliation of Adjusted EBITDA to its nearest GAAP financial measure, as well as a discussion of the usefulness, comparability and limitations of Adjusted EBITDA.

In fiscal 2022, TradeStation began to increase its marketing spend, substantially so beginning in the third quarter of fiscal 2022, with the aim of increasing its rate of customer account growth, and began making substantial increases in employee headcount to accelerate the completion of new product features and enhancements, which were the primary reasons for TradeStation’s net loss in fiscal 2022, and such net loss may continue. There is no assurance that these substantially increased marketing spend and employee headcount costs will generate the increases in TradeStation’s customer account growth or net revenue that are targeted, or ultimately generate profitable results, and the rate of customer account growth in the second half of fiscal 2022 was in fact lower, and resulted in an account acquisition cost that was higher, than TradeStation originally targeted. TradeStation’s ability to translate its increased marketing spend into new customer accounts in a cost-efficient manner will depend on a variety of factors, particularly its marketing decisions and how effectively and timely adjustments are made to those decisions based on actual results, as well as many factors which are beyond TradeStation’s control, such as investor sentiment, the overall state of the economy and the markets which TradeStation offers, including market volume and direction, volatility and performance, and increased competition. TradeStation’s ability to maintain or increase its

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current conversion rate of customers exposed to its marketing into new funded customer accounts is dependent on these factors along with overall interest of customers in trading in the financial markets, generally, as well as in the specific products and services it offers.

Further, in light of TradeStation’s fiscal 2022 marketing and account acquisition results having been less favorable than TradeStation originally targeted, as well as recent and current market conditions, which have included, and may continue to include, severe inflation, rising interest rates, market volatility and declines, and the perceived possibility of an impending recession, TradeStation is now focusing on lowering its marketing spend and headcount increases and, overall, on a more balanced approach to the goal of growing revenue while returning to profitability. These factors have resulted in TradeStation focusing more on higher-value customer accounts and targeted marketing approaches, such as API-centered and referral-centered relationships, versus broader approaches, such as brand awareness marketing.

The nature of TradeStation’s business, particularly as a self-clearing brokerage firm for equities, options and futures, requires it to be in ongoing and continual compliance with numerous, complex and changing regulatory frameworks, rules and regulations imposed by numerous and distinct regulatory authorities. TradeStation Securities is an SEC-licensed broker-dealer, a CFTC-licensed FCM and a member of FINRA, SIPC, CME, NFA, DTC, NSCC, OCC and several equities and futures exchanges. As such, it is subject to extensive securities and futures industry regulation under both federal and state laws as a broker-dealer with respect to its equities, equity options and securities lending business, and as an FCM with respect to its futures business. TradeStation Crypto is registered with the Financial Crimes Enforcement Network as a regulated money services business and numerous state agencies which regulate money transmitter, money services and digital currencies businesses, and is subject to regulation by those agencies and authorities with respect to its cryptocurrency brokerage business. Similarly, TradeStation is subject to the jurisdiction of U.S. state attorneys general and other state regulators, including state securities and financial services regulators, who can bring legal actions on behalf of the citizens of their states to assure compliance with state laws. In addition, criminal authorities, such as the U.S. Department of Justice, may institute civil or criminal proceedings for violating applicable laws, rules or regulations. See “Risk Factors — Risks Related to Regulation and Litigation — The nature of TradeStation’s business, particularly as a self-clearing brokerage firm for equities, options and futures, requires it to be in compliance with numerous, complex and changing regulatory frameworks, rules and regulations imposed by numerous and distinct regulatory authorities and to maintain a significant regulatory financial and operations compliance infrastructure. Changes in these laws and regulations, failure to comply with these laws and regulations, and proceedings and investigations related thereto, could harm TradeStation’s business, financial condition and results of operations.”

The majority of TradeStation’s revenue is transaction-based, in that TradeStation receives, based upon the applicable transaction-fee structure and order type, commissions and other transaction-based fees earned for executing trades for customers in stocks, ETFs, options, futures, futures options, and cryptocurrencies, as well as PFOF for customer equity and equity option trades. PFOF constitutes a significant portion of TradeStation’s transaction-based revenue and total revenue. For example, PFOF represented approximately 30% and 33% of TradeStation’s trading-related revenue for fiscal 2021 and fiscal 2022, respectively, and 23% and 26% of TradeStation’s total net revenues for fiscal 2021 and fiscal 2022, respectively, and TradeStation expects revenue derived from PFOF to represent as much as approximately 30% to 36% of TradeStation’s trading-related revenue in fiscal 2022 and the next two fiscal years. Recently, PFOF practices have been under scrutiny by the U.S. Congress, the SEC, FINRA and other regulators, with some indicating that the curtailment, elimination or additional regulation of PFOF may be considered. The curtailment, elimination or additional regulation of PFOF could have a material adverse impact on TradeStation’s business, financial condition and results of operations. See “Risk Factors — Because a majority of its revenue is transaction-based (including brokerage commissions and fees and PFOF), continued commission-and-fee price compression (or elimination), or reduced levels of market trading activity, volume or volatility, or regulatory changes that limit or eliminate any of these types of revenue, may result in slower or no growth, higher account acquisition cost and reduced revenue and profitability — Risks Related to Regulation of PFOF.”

Beginning in the fourth quarter of fiscal 2020 and ending on June 30, 2022, TradeStation loaned cryptocurrencies, including stablecoin, to institutional borrower counterparties for the purpose of generating interest revenue from such loans. These included loans of proprietary cryptocurrency assets owned by TradeStation, as well as cryptocurrency assets owned by customers. TradeStation’s cryptocurrency lending

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arrangements with third-party institutional borrowers have been fully collateralized or over-collateralized, and have generally included receiving from such borrowers as collateral other marketable cryptocurrencies. As of March 31, 2022, outstanding cryptocurrency loans made by TradeStation Crypto had an aggregate collateralization rate of approximately 157%, and the lowest collateralization at March 31, 2022 of any individual loan then outstanding was approximately 131%. The SEC and certain state regulators have recently challenged the legality or appropriateness of cryptocurrency exchanges or brokerage firms engaging in these kinds of activities. After carefully considering, in consultation with various of its advisors, the regulatory issues and the historical and anticipated benefits to the business of rehypothecating or lending customer and TradeStation cryptocurrency assets and paying customers interest on their cryptocurrency account balances, TradeStation decided to discontinue all such activities effective June 30, 2022. As a result of this decision, no loans of customer assets are outstanding and no interest will accrue after June 30, 2022 and, with respect to proprietary loans of TradeStation cryptocurrency assets (all of which are USDC stablecoin and have fixed terms), no further loans have been originated or renewed since May 31, 2022 and the loans which remain outstanding after July 1, 2022 (in the aggregate principal amount of $18 million) will terminate upon their respective maturity dates, including one $13 million loan that matures August 26, 2022 and one $5 million loan that matures January 30, 2023. Although no assurances can be given, TradeStation does not expect the discontinuation of these activities to have a material adverse effect on its financial condition or results of operations. See “Risk Factors — Risks Related to TradeStation’s Cryptocurrency Products and Services — TradeStation recently decided to cease its cryptocurrency lending and payment of interest on customers’ cryptocurrency assets and will therefore no longer generate revenue from these activities and may experience a loss of customers as a result, which could negatively affect its business. TradeStation could also be subject to fines or other regulatory actions as a result of previously conducting these activities. ”

In addition, on December 23, 2020, the SEC issued a statement regarding the custody of cryptocurrencies that are “securities” by broker-dealers. The statement sets forth the SEC’s position that, until December 23, 2025, a broker-dealer will not be subject to an SEC enforcement action on the basis that the broker-dealer has obtained and maintained physical possession or control of customer fully paid and excess margin cryptocurrencies that are securities; provided that all of the conditions set forth in that statement are satisfied. These conditions include, among other things, that the broker-dealer limits its business to cryptocurrencies that are securities, maintains exclusive control over those cryptocurrencies that it holds in custody, establishes and implements policies and procedures reasonably designed to mitigate the risks associated with conducting a business in cryptocurrencies that are securities and provides customers with certain disclosures regarding the risks of engaging in transactions involving cryptocurrencies that are securities. If any of the cryptocurrencies that TradeStation Crypto transacts in or maintains custody of are deemed to be securities under the federal securities laws, TradeStation would likely be subject to additional regulation that would obligate it to register as a broker-dealer with respect to its role in facilitating transactions in such cryptocurrency and therefore make it subject to the requirements set forth in the SEC’s December 23, 2020 statement, which could require changes to TradeStation Crypto’s custody policies and procedures that may result in significant costs and efforts for TradeStation. TradeStation Crypto could also be subject to SEC enforcement action against it with respect to its prior activities related to such cryptocurrency, which may result in injunctions, cease and desist orders, fines and penalties. See “Risk Factors — Risks Related to Regulation and Litigation — Public officials have signaled an increased focus on new or additional regulations that could impact TradeStation’s business and require TradeStation to make significant changes to its business model and practices, including with respect to social communities, PFOF, cryptocurrency lending, paying cryptocurrency interest on customer cryptocurrency account balances and custody of cryptocurrencies. Changes in these regulations, or interpretations thereof by regulators, failure to comply with these regulations, or proceedings and investigations related thereto, could harm its business, financial condition and results of operations.”

The mailing address for TradeStation’s principal executive office is 8050 S.W. 10th Street, Plantation, Florida 33324 and its telephone number is (954) 652-7000.

Merger Sub

Merger Sub is a newly formed corporation organized under the laws of the State of Delaware and a wholly owned subsidiary of TradeStation. Merger Sub was formed solely for the purpose of effecting the Merger and has not carried on any activities other than those in connection with the Merger.

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The mailing address for Merger Sub’s principal executive office is c/o Corporate Creations Network Inc., 3411 Silverside Road, Tatnall Building #104, Wilmington, Delaware 19810 and its telephone number is (302) 351-3367.

Quantum

Quantum is a recently incorporated blank check company, organized under the laws of the State of Delaware, formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which is referred to throughout this proxy statement/prospectus as Quantum’s initial business combination. Quantum Units, Public Shares and the Public Warrants are listed on NYSE under the ticker symbols “QFTA.U,” “QFTA” and “QFTA WS,” respectively.

The mailing address of Quantum’s principal executive office is 4221 W. Boy Scout Blvd., Suite 300, Tampa, Florida 33607. Pursuant to the Business Combination, Quantum will become a wholly owned subsidiary of TradeStation.

Ownership Structure

The diagram below depicts the organizational structures of Quantum and TradeStation immediately after the issuance of the PIPE Shares but immediately before giving effect to the Merger.

The diagram below depicts the organizational structure of TradeStation immediately after giving effect to the Merger. If the Merger Agreement is approved by Quantum’s stockholders, and the transactions contemplated by the Merger Agreement are consummated, Merger Sub will merge with and into Quantum, with Quantum continuing as the surviving corporation and a wholly owned subsidiary of TradeStation.

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The Merger Agreement (page 147)

The terms and conditions of the merger of Merger Sub with and into Quantum, with Quantum surviving the merger as a wholly owned subsidiary of TradeStation, are contained in the Merger Agreement, which is attached as AnnexA to this proxy statement/prospectus. You should read the Merger Agreement carefully, as it is the legal contract that governs the Merger.

Merger Consideration

Each Quantum Share (other than any Excluded Share, PIPE Share and Sponsor Share) will be converted into, and each holder thereof shall have the right to receive in respect of each Quantum Share, a number of TradeStation Shares equal to the lower of: (A) 1.3727; and (B)(1) the sum of (x) the number of Public Shares outstanding immediately prior to the Closing for which Quantum stockholders have not elected redemption and (y) 750,000, divided by (2) the number of Public Shares outstanding immediately prior to the Closing for which Quantum stockholders have not elected redemption. This formula reflects the up to 750,000 Non-Redemption Bonus Shares TradeStation will be issuing at Closing as an incentive to Quantum stockholders not to redeem their Public Shares. (Such 750,000 Non-Redemption Bonus Shares will be delivered as Merger consideration ratably to such Public Stockholders that hold any number of Quantum Shares not redeemed (subject to the cap on the Exchange Ratio described elsewhere in this proxy statement/prospectus)). Public Stockholders will receive between 1.0373 TradeStation Shares (assuming no redemptions) and 1.3727 TradeStation Shares (assuming 90% or more redemptions) for each Quantum Share owned depending on how many Public Shares are redeemed.

Each of the PIPE Shares and Sponsor Shares will be converted into, and each holder thereof shall have the right to receive in respect of each such share, one TradeStation Share.

Each Quantum Warrant will become a TradeStation Warrant, with each such warrant exercisable for the number of TradeStation Shares that the holder thereof would have received if such warrant had been exercisable and exercised immediately prior to the Merger.

Matters Being Voted On

The Quantum stockholders will be asked to consider and vote on the following proposals at the Special Meeting:

(i)

a proposal to adopt the Merger Agreement and approve the transactions described in this proxy statement/prospectus, see “Proposal No. 1 — The Merger Proposal”;

(ii)

a proposal to approve the issuance of 13,250,000 PIPE Shares in a private offering of securities to the PIPE Investors in connection with the Business Combination, which will occur immediately prior to the Closing, with such PIPE Shares converted into an equal number of TradeStation Shares in the Merger, and the issuance by TradeStation, as the successor to Quantum’s obligations under the Subscription Agreements, of up to 4,038,462 Additional Shares following the Closing dependent on the trading price of the TradeStation Shares during the relevant measurement period and subject to certain other conditions, see “Proposal No. 2 — The PIPE Proposal”; and

(iii)

a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Merger Proposal or the PIPE Proposal, see “Proposal No. 3 — The Adjournment Proposal.”

The Quantum Board of Directors’ Reasons for the Merger (page 119)

After careful consideration, the Quantum Board recommends that Quantum stockholders vote “FOR” each proposal being submitted to a vote of the Quantum stockholders at the Special Meeting. For a description of Quantum’s reasons for the approval of the Merger and the recommendation of the Quantum Board, see the section titled “Proposal No. 1 — The Merger Proposal — Recommendation of the Quantum Board and Reasons for the Business Combination.”

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Interests of Quantum’s Directors and Officers and the Sponsors in the Business Combination (page127)

Quantum’s officers and directors and the Sponsors may have interests in the Business Combination that may be different from, or in addition to, the interests of Public Stockholders. The members of the Quantum Board were aware of and considered these interests, among other matters, when they approved the Merger Agreement and recommended that Quantum stockholders approve the proposals required to effect the Merger. See “Proposal No. 1 — The Merger Proposal — Interests of Quantum’s Directors and Officers and the Sponsors in the Business Combination.”

Certain U.S. Federal Income Tax Considerations (page 162)

For a description of certain U.S. federal income tax consequences of the Business Combination, the exercise of redemption rights in respect of Quantum Shares and the ownership and disposition of TradeStation Shares, please see the information set forth in “Certain U.S. Federal Income Tax Considerations” beginning on page 162.

Redemption Rights

Quantum is providing Public Stockholders with the opportunity to redeem all or a portion of their Public Shares upon consummation of the Business Combination. Public Stockholders who have elected to exercise their redemption rights will be entitled to receive cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account, calculated as of two business days prior to the Closing (including interest earned on the funds held in the Trust Account, net of taxes), upon consummation of the Business Combination. A holder of Public Shares may elect to redeem without voting, and if they do vote, irrespective of whether they vote for or against the Merger Proposal.

The amount in the Trust Account is approximately $10.00 per Public Share (based on the Trust Account balance as of March 31, 2022). The redemption right includes the requirement that any beneficial owner on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its Public Shares. There will be no redemption rights upon the completion of the Business Combination with respect to Quantum Warrants. The Sponsors have agreed to waive their redemption rights in connection with the consummation of the Business Combination with respect to any Quantum Shares they may hold. The Sponsors did not receive any compensation in exchange for this agreement to waive their redemption rights. Currently, the Sponsors own approximately 20% of the Quantum Shares, consisting of Sponsor Shares and Public Shares.

Ownership

Upon consummation of the Business Combination, the Quantum stockholders (other than in respect of Excluded Shares) will become TradeStation stockholders.

The following table illustrates the varying ownership amounts and percentages for TradeStation after the Business Combination under three scenarios: one with no redemptions by Public Stockholders, one with 50% redemptions by Public Stockholders and one with maximum redemptions by Public Stockholders. In addition, the ownership percentages below are based on the assumption that there are no adjustments for the outstanding Quantum Warrants issued in connection with or concurrently with Quantum’s IPO as such securities are not exercisable until the later of February 9, 2022 and the Closing. Further, there are no adjustments for the up to (i) 948,894 TradeStation Shares to be delivered as Sponsor Earn Out Shares to Sponsor and (ii) 33,998,232 TradeStation Shares to be delivered as Monex Earn Out Shares to Monex or its Permitted Transferees (as defined in the TradeStation Support Agreement) as the Sponsor Earn Out Shares and the Monex Earn Out Shares will only be delivered following the Closing contingent upon the occurrence of either Triggering Event I or Triggering Event II.

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​

As of March 31, 2022(1)

​

Assuming no redemptions

Assuming 50% redemptions

Assuming 100% redemptions

​

Shares

%

Shares

%

Shares

%

Quantum stockholders (including the Sponsors)(2)

​

23,496,802

​

14.1

​

13,434,302

​

8.6

​

2,621,802

​

1.8

Monex Shares (excludes 5 million Monex PIPE Shares)(3)

​

129,750,000

​

77.9

​

129,750,000

​

82.9

​

129,750,000

​

89.1

PIPE Shares (includes 5 million Monex PIPE Shares)(4)

​

13,250,000

​

8.0

​

13,250,000

​

8.5

​

13,250,000

​

9.10

Total TradeStation Shares outstanding at the Closing (excluding Monex Earn Out Shares and Sponsor Earn Out Shares)(5)

​

166,496,802

​

100.0

​

156,434,302

​

100.0

​

145,621,802

​

100.0

Sponsor Earn Out Shares

​

948,894

​

​

​

948,894

​

​

​

948,894

​

​

Monex Earn Out Shares

​

33,998,232

​

​

​

33,998,232

​

​

​

33,998,232

​

​

Total TradeStation Shares outstanding at the Closing (including Monex Earn Out Shares and Sponsor Earn Out Shares)

​

201,443,928

​

​

​

191,381,428

​

​

​

180,568,928

​

​

(1)

The figures in the above table are presented only as illustrative examples and are based on the assumptions described above, which may be different from the actual amount of redemptions in connection with the Business Combination.

(2)

Includes 750,000 Non-Redemption Bonus Shares to be issued in the aggregate to Public Stockholders who have elected not to redeem their Quantum Shares. Such 750,000 Non-Redemption Bonus Shares will be delivered as Merger consideration ratably to such Public Stockholders that hold any number of Quantum Shares not redeemed (subject to the cap on the Exchange Ratio described elsewhere in this proxy statement/prospectus).

(3)

“Monex Shares” does not include Monex’s $50 million PIPE Investment for which it will receive an additional 5 million TradeStation Shares. Combining Monex’s PIPE Shares with Monex Shares results in Monex ownership of 80.93% assuming no redemptions, 86.14% assuming 50% redemptions and 92.53% assuming max redemptions.

(4)

“PIPE Shares” includes the 5 million TradeStation Shares Monex will receive for its $50 million PIPE Investment.

(5)

Excludes any grants or vesting of restricted stock units or performance stock units pursuant to the Omnibus Incentive Plan, including those described in the Executive Agreements with each of TradeStation’s named executive officers.

Appraisal Rights

TradeStation Shares issued as merger consideration will be listed on a national securities exchange at Closing. As a result, neither Quantum stockholders nor Quantum warrant holders have appraisal rights in connection with the Business Combination under the DGCL.

The Adjournment Proposal

If, based on the tabulated vote, there are not sufficient votes at the time of the Special Meeting to authorize Quantum to consummate the Merger, the Quantum Board may submit a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation of proxies. Please see the section of this proxy statement/prospectus titled “The Adjournment Proposal.”

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Date, Time and Place of Special Meeting of Quantum’s Stockholders

The Special Meeting will be held virtually on           , 2022, at           (New York City time) and conducted exclusively via live webcast at http://           . At the Special Meeting, Quantum stockholders will be asked to approve the Merger Proposal, the PIPE Proposal and the Adjournment Proposal (if necessary).

Voting Power; Record Date

A majority of the voting power of the Quantum Shares entitled to vote at the Special Meeting must be represented at the meeting by virtual attendance or by proxy to constitute a quorum and in order to conduct business at the Special Meeting.

Approval of the Merger Proposal requires the affirmative vote of a majority of the outstanding Quantum Shares entitled to vote thereon. Approval of the PIPE Proposal and the Adjournment Proposal (if necessary) requires the affirmative vote of a majority of the votes cast by holders of outstanding Quantum Shares represented at the Special Meeting by virtual attendance or by proxy and entitled to vote thereon. Approval of the Adjournment Proposal (if necessary) requires the affirmative vote of a majority of the votes cast by holders of outstanding Quantum Shares represented at the Special Meeting by virtual attendance or by proxy and entitled to vote on the Adjournment Proposal. The Quantum Board has fixed the close of business on           , 2022 as the Quantum Record Date for determining the holders of Quantum Shares entitled to receive notice of and to vote at the Special Meeting. As of the Quantum Record Date, there were 20,125,000 Public Shares and 5,031,250 Sponsor Shares outstanding and entitled to vote at the Special Meeting held by           holders of record. Each Quantum Share entitles the holder to one vote at the Special Meeting on each proposal to be considered at the Special Meeting.

Quorum and Vote of Quantum Stockholders

A majority of the voting power of the Quantum Shares, which is 12,578,126 Quantum Shares, present at the Special Meeting by virtual attendance or by proxy and entitled to vote at the meeting is required to constitute a quorum and in order to conduct business at the Special Meeting. A vote to “ABSTAIN” from voting shares represented at the meeting by virtual attendance or by proxy on one or more of the proposals
in this proxy statement/prospectus will count as present for the purposes of establishing a quorum. Broker Non-Votes will not count as present for the purposes of establishing a quorum. In the absence of a quorum, the chairman of the Special Meeting may adjourn the Special Meeting.

Certain Voting Arrangements

Sponsor Support Agreement

Contemporaneously with the execution of the Merger Agreement, the Sponsors entered into the Sponsor Support Agreement, pursuant to which, among other things, (i) each Sponsor agreed to vote in favor of, and to adopt and approve, the Merger Agreement and all other documents and transactions contemplated thereby; (ii) Sponsor Holdco agreed to deliver a duly executed copy of the Registration Rights Agreement on the date of Closing; (iii) each Sponsor agreed to the lock-up restrictions set forth in the Sponsor Support Agreement; (iv) each Sponsor agreed to waive its redemption rights in connection with the consummation of the Business Combination with respect to any Quantum Shares it or they may hold; (v) each Sponsor agreed that no working capital warrant will be issued as repayment of any outstanding working capital loans and not to demand conversion of any outstanding working capital loans into working capital warrants; and (vi) each Sponsor agreed not to commence or participate in, and to take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against Quantum, TradeStation, TradeStation’s or Quantum’s affiliates or any of their respective successors, assigns relating to the negotiation, execution or delivery of the Sponsor Support Agreement, the Merger Agreement or the consummation of the Business Combination.

TradeStation Support Agreements

Contemporaneously with the execution of the Merger Agreement, Quantum, TradeStation and Monex entered into the TradeStation Support Agreement, pursuant to which, among other things, Monex (in its

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capacity as the sole stockholder of TradeStation) agreed to (i) vote in favor of, and to adopt and approve, the adoption of the Amended Charter and the Amended Bylaws of TradeStation, (ii) deliver a duly executed copy of the Registration Rights Agreement on the Closing Date and (iii) the lock-up restrictions in the TradeStation Support Agreement. In addition, TradeStation (in its capacity as the sole stockholder of Merger Sub) agreed to deliver a written consent approving the Merger Agreement and the transactions contemplated thereby.

Proxy Solicitation

Proxies may be solicited by mail, telephone or in person. Quantum has engaged           to assist in the solicitation of proxies.

If a Quantum stockholder grants a proxy, it may still vote its shares in person if it revokes its proxy before the Special Meeting. A Quantum stockholder may also change its vote by submitting a later-dated proxy as described in the section of this proxy statement/prospectus titled “Special Meeting of Quantum Stockholders — Revoking Your Proxy.”

Recommendation to Stockholders

The Quantum Board believes that the Merger Proposal and the other proposals to be presented at the Special Meeting are fair to and in the best interest of Quantum stockholders and unanimously recommends that Quantum stockholders vote “FOR” the Merger Proposal and the PIPE Proposal and “FOR” the Adjournment Proposal, and if presented.

Comparison of Rights of TradeStation Stockholders and Quantum Stockholders (page 301)

If the Business Combination is successfully completed, Quantum stockholders will become holders of TradeStation Shares, and their rights as stockholders will be governed by TradeStation’s organizational documents. There are also differences between the laws governing Quantum, a Delaware corporation, and TradeStation, a Florida corporation. Please see “Comparison of Rights of TradeStation Stockholders and Quantum Stockholders” on page 301 for more information.

Emerging Growth Company

Each of Quantum and TradeStation is, and consequently, following the Merger, TradeStation will be, an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, TradeStation will be eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find TradeStation Shares less attractive as a result, there may be a less active trading market for TradeStation Shares and the prices of TradeStation Shares may be more volatile.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. TradeStation has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, TradeStation, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of TradeStation’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.

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TradeStation will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year following the fifth anniversary of the Closing, in which (a) TradeStation has total annual gross revenue of at least $1.07 billion or (b) TradeStation is deemed to be a large accelerated filer, which means the market value of TradeStation’s common equity that is held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter; and (ii) the date on which TradeStation has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.

Regulatory Matters

The Business Combination is not subject to any federal or state regulatory requirement or approval, except for filings with the State of Delaware necessary to effectuate the Merger at the Closing.

Risk Factors

In evaluating the proposals to be presented at the Special Meeting, a stockholder should carefully read this proxy statement/prospectus, including the annexes, and especially consider the factors discussed in the section of this proxy statement/prospectus titled “Risk Factors.” Some of the risks related to Quantum and TradeStation are summarized below:

(i)

TradeStation’s results of operations and other operating metrics may fluctuate significantly from quarter to quarter, which could result in frequent volatility in its share price.

(ii)

If TradeStation fails to retain existing customers or fails to attract new customers in a cost-effective manner (or in general), or if its customers decrease their use of its products and services, TradeStation’s account and revenue growth could be slower than it expects (and, in fact, in the second half of fiscal 2022 customer account growth was lower than targeted), or even negative, and its business may be materially harmed.

(iii)

If TradeStation is unable to manage its growth successfully, its financial performance may suffer, and its brand and reputation may be harmed.

(iv)

TradeStation’s business and reputation may be harmed by changes in business, economic or political conditions that impact financial markets, including systemic market events.

(v)

TradeStation operates in highly competitive markets, and many of TradeStation’s competitors have greater resources than TradeStation does and may have products and services that may be more appealing than TradeStation’s are to current and potential customers.

(vi)

A significant portion of TradeStation’s revenue depends on the interest income it can earn on its customers’ assets in its custody. TradeStation is therefore subject to interest rate risk and fluctuations in the market, which it does not control.

(vii)

Because the majority of TradeStation’s revenue is transaction-based (including brokerage commissions and fees and PFOF), continued commission-and-fee price compression (or elimination), or reduced levels of market trading activity, volume or volatility, or regulatory changes that limit or eliminate any of these types of revenue, may result in slower or no growth, higher account acquisition cost and reduced revenue and profitability.

(viii)

TradeStation’s growth will depend, in part, on the success of its important relationships with third-parties, including critical vendors and third-party relationships related to marketing, lead referrals, account growth and self-clearing. Overreliance on certain third-parties, or TradeStation’s inability to maintain or extend existing relationships or establish new relationships on favorable terms or at all, may cause unanticipated costs or decreased account growth and revenue, negatively impact customer awareness of, or engagement with, TradeStation and impact TradeStation’s financial performance in the future.

(ix)

TradeStation may require additional capital to satisfy its liquidity needs and support its business growth and objectives, and this capital might not be available to use on reasonable terms, if at all, and may result in stockholder dilution and limitations to TradeStation’s business and operations.

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(x)

TradeStation’s exposure to credit risk with customers and counterparties could result in uncollectible unsecured debts and counterparty obligations and other potentially unrecoverable obligations owed to it.

(xi)

The market for cryptocurrency is fragmented, volatile and unpredictable, which may prevent customers from easily entering or liquidating their cryptocurrency positions and which may increase their losses or prevent them from realizing their gains, or result in large losses over a short period of time.

(xii)

Cryptocurrency is believed by many to attract a disproportionately high, as compared to legal tender and other asset classes, number of bad actors who engage, or seek to engage, in cyber-attacks, fraud, theft, money laundering and other crimes or illegal or prohibited activities. Additionally, transactions in cryptocurrency may be irreversible and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable.

(xiii)

The nascent, novel and evolving nature of cryptocurrency creates greater risks when compared to other asset classes, which in turn raises the risk of harm to TradeStation’s customers and TradeStation, the creation of unrecoverable losses to TradeStation’s customers and TradeStation, and negative regulatory and political actions. These risks may result in substantial claims and other actions being brought against TradeStation by customers, regulators and other authorities, which may result in large judgments, settlements, fines, cease-and-desist and similar orders or sanctions, which could limit TradeStation’s cryptocurrency business or eliminate parts of it, and which harm TradeStation’s brand, reputation, business, financial condition and results of operations.

(xiv)

Regulation of the cryptocurrency industry is incipient, fragmented and complex and will likely change substantially. TradeStation’s interpretations of any cryptocurrency regulation may be subject to challenge by the relevant regulators and TradeStation’s failure to comply with such regulation may negatively impact its ability to allow customers to buy, hold and sell cryptocurrencies with it in the future and may significantly and materially adversely affect its business, financial condition and results of operations.

(xv)

The nature of TradeStation’s business, particularly as a self-clearing brokerage firm for equities, options and futures, requires it to be in compliance with numerous, complex and changing regulatory frameworks, rules and regulations imposed by numerous and distinct regulatory authorities and to maintain a significant regulatory financial and operations compliance infrastructure. Changes in these laws and regulations, failure to comply with these laws and regulations, and proceedings and investigations related thereto, could harm TradeStation’s business, financial condition and results of operations.

(xvi)

Public officials have signaled an increased focus on new or additional regulations that could impact TradeStation’s business and require TradeStation to make significant changes to its business model and practices, including with respect to social communities, PFOF, cryptocurrency lending, paying cryptocurrency interest on customer cryptocurrency account balances and custody of cryptocurrencies. Changes in these regulations, or interpretations thereof by regulators, failure to comply with these regulations, or proceedings and investigations related thereto, could harm its business, financial condition and results of operations.

(xvii)

TradeStation is subject to legal and regulatory investigations, proceedings and claims in the ordinary course of its business, which could cause it to incur significant legal expenses, damages and fines. An adverse resolution of any future legal proceedings or claims could result in a negative perception of TradeStation and have a material adverse effect on its business, financial condition and results of operations.

(xviii)

TradeStation’s platform and systems have been, and may in the future be, subject to interruption, including extended outages, and instability due to operational and technological failures, whether internal or external, which could have a material adverse effect on its operations, brand reputation and ability to acquire and retain customers.

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(xix)

TradeStation’s products and internal systems rely on software that is highly technical, and these systems may contain errors, latencies, bugs or vulnerabilities, and TradeStation may be unsuccessful in addressing or mitigating any such technical limitations or vulnerabilities in its systems in a timely fashion, or at all, which could have a material adverse effect on TradeStation’s operations, brand, reputation and ability to acquire and retain customers.

(xx)

Because TradeStation collects, uses and otherwise processes customer information and other data, including personal data, its business could be materially and adversely affected by a cybersecurity breach, or by an actual or perceived failure by TradeStation or its third-party service providers to protect such information and data or to respect customers’ privacy, which could damage TradeStation’s reputation and brand, negatively affect its ability to retain customers and could materially or permanently damage its business, financial condition and results of operations.

(xxi)

Potential distributed denial of service (“DDoS”) attacks and ransomware attacks are, and will likely continue to be, a large and serious threat to TradeStation’s business, and businesses like TradeStation’s, and they are difficult to detect, prevent or defend against, and could materially or permanently damage TradeStation’s business, financial condition and results of operations.

(xxii)

Any failure to obtain, maintain, protect, defend or enforce TradeStation’s important intellectual property rights, which consist primarily of its proprietary software and technology which constitutes the platform service offerings TradeStation provides, and its “TradeStation” and other trademarks, could materially adversely affect its business, financial condition and results of operations.

(xxiii)

A market for TradeStation’s securities may not develop or be sustained, which would adversely affect the liquidity or price of those securities. If securities or industry analysts do not publish research or publish unfavorable research (even if inaccurate) about TradeStation’s business the price and liquidity of its securities could decline.

(xxiv)

The market price and trading volume of TradeStation’s securities may be volatile and could decline significantly following the Business Combination.

(xxv)

Sales of a substantial number of TradeStation Shares in the public market by the then-existing stockholders could cause its share price to decline.

(xxvi)

After the Closing, a significant number of TradeStation Shares are subject to issuance upon exercise of outstanding warrants or delivery pursuant to earn-out formulas, which may result in dilution to TradeStation’s stockholders.

(xxvii)

Following the Business Combination, Monex will continue to control the direction of TradeStation’s business. Monex’s concentrated ownership of the outstanding TradeStation Shares will prevent you and other stockholders from influencing significant decisions.

(xxviii)

TradeStation will be a “controlled company” within the meaning of the rules of the NYSE and, as a result, will qualify for, and may rely on, exemptions from certain corporate governance requirements. If TradeStation relies on such exemptions, you will not have the same protections afforded to stockholders of companies that are subject to such requirements.

(xxix)

TradeStation may be unable to maintain the listing of its securities in the future.

(xxx)

Quantum may not be able to complete the Business Combination or any other business combination within the prescribed time frame, in which case Quantum would cease all operations except for the purpose of winding up and would redeem its Public Shares and liquidate.

(xxxi)

Because the Exchange Ratio will depend on the number of Public Shares redeemed and the market price of the Quantum Shares will fluctuate, Public Stockholders will not know the number of TradeStation Shares they will receive until after the Redemption Deadline.

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(xxxii)

Provisions in the Subscription Agreements provide for the issuance of additional TradeStation Shares to the PIPE Investors following the Closing based on the trading price of TradeStation Shares, and the issuance of such additional shares could cause TradeStation Stockholders following the Merger (other than the PIPE Investors) to experience significant dilution.

(xxxiii)

The projections and forecasts presented in this proxy statement/prospectus are not an indication of the actual results of the Business Combination or TradeStation’s future results.

(xxxiv)

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is preliminary and the actual financial condition and results of operations after the Business Combination may differ materially.

(xxxv)

The market price of TradeStation Shares after the Business Combination will be affected by factors different from those currently affecting the prices of Public Shares.

(xxxvi)

Future resales of the TradeStation Shares issued in connection with the Business Combination may cause the market price of the TradeStation Shares to drop significantly, even if its business is doing well.

(xxxvii)

TradeStation cannot assure you that the TradeStation Shares or TradeStation Warrants will be approved for listing on the NYSE or that TradeStation will be able to comply with the continued listing standards of the NYSE.

(xxxviii)

If a Public Stockholder fails to properly demand redemption rights, it will not be entitled to convert its Public Shares into a pro rata portion of the Trust Account.

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UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER SHARE DATA OF QUANTUM AND TRADESTATION

The following table sets forth summary historical comparative share and unit information for Quantum and TradeStation and unaudited pro forma condensed combined per share information of Quantum after giving effect to the Business Combination (as defined in the section titled “Unaudited Pro Forma Condensed Combined Financial Information”), assuming three redemption scenarios, as follows:

(i)

Assuming No Redemptions:   This presentation assumes that no Public Stockholders exercise redemption rights with respect to their Public Shares.

(ii)

Assuming 50% Redemptions:   This presentation assumes that Public Stockholders holding 10,062,500 Quantum Shares will exercise their redemption rights for $100,632,564 in the Trust Account as of March 31, 2022. The unaudited pro forma book value information reflects the Business Combination as if it had occurred on March 31, 2022. The weighted average shares outstanding and net earnings per share information reflect the Business Combination as if it had occurred on April 1, 2020.

(iii)

Assuming Maximum Redemptions:   This presentation assumes that Public Stockholders holding approximately 20,125,000 Quantum Shares will exercise their redemption rights for $201,265,127 in the Trust Account as of March 31, 2022. The unaudited pro forma book value information reflects the Business Combination as if it had occurred on March 31, 2022. The weighted average shares outstanding and net earnings per share information reflect the Business Combination as if it had occurred on April 1, 2020.

This information is only a summary and should be read together with the summary historical financial information included elsewhere in this proxy statement/prospectus, and the historical financial statements of Quantum and TradeStation and related notes that are included elsewhere in this proxy statement/​prospectus. The unaudited pro forma combined per share information of Quantum and TradeStation is derived from, and should be read in conjunction with, the unaudited pro forma combined financial statements and related notes included elsewhere in this proxy statement/prospectus.

The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of Quantum and TradeStation would have been had the companies been combined during the periods presented.

​	Assuming No Redemptions			Assuming 50% Redemptions			Assuming 100% Redemptions
As of and for the fiscal year ended March 31, 2022	​
Book value (deficit) per share – basic and diluted(1)	​	$	1.04	​	$	0.47	​	$	(0.18)
Weighted average shares outstanding – basic and diluted(2)	​	​	166,496,802	​	​	156,434,302	​	​	145,621,802
Net income (loss) per share – basic and diluted	​	$	(0.35)	​	$	(0.38)	​	$	(0.40)
Shareholders’ equity (deficit) (in thousands)	​	$	174,546	​	$	73,903	​	$	(26,719)

(1)

Book value per share equals total equity divided by total weighted average shares outstanding.

(2)

Excludes any grants or vesting of restricted stock units or performance stock units pursuant to the Omnibus Incentive Plan, including those described in the Executive Agreements with each of TradeStation’s named executive officers.

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PRICE RANGE OF SECURITIES AND DIVIDENDS

Market Price of Quantum Units, Public Shares and Public Warrants

The Quantum Units, Public Shares and Public Warrants are listed on the NYSE under the ticker symbols “QFTA.U,” “QFTA” and “QFTA WS,” respectively. The closing price of the Quantum Units, Public Shares and Public Warrants on November 3, 2021, the last Trading Day before announcement of the execution of the Merger Agreement, was $10.17, $9.83 and $0.37, respectively. As of           , 2022, the Quantum Record Date for the Special Meeting, the closing price of the Quantum Units, Public Shares and Public Warrants was $      , $      and $      , respectively.

The following table shows, for the periods indicated, the high and low closing prices per share of the Quantum Units, Public Shares and Public Warrants as reported by the NYSE. Prior to February 9, 2021, there was no established public trading market for Quantum Units. Public Shares and Public Warrants began trading on March 10, 2021.

​	Quantum Units						Public Shares						Public Warrants
Calendar Quarter	High			Low			High			Low			High			Low
First quarter 2021 (from March 10, 2021)	​	$	10.32	​	$	9.88	​	$	9.85	​	$	9.60	​	$	0.47	​	$	0.30
Second quarter 2021	​	$	10.15	​	$	9.93	​	$	9.90	​	$	9.65	​	$	0.37	​	$	0.26
Third quarter 2021	​	$	10.20	​	$	9.96	​	$	9.85	​	$	9.68	​	$	0.40	​	$	0.26
Fourth quarter 2021	​	$	10.65	​	$	10.04	​	$	10.22	​	$	9.80	​	$	0.73	​	$	0.24
First quarter 2022	​	$	10.34	​	$	10.09	​	$	9.90	​	$	9.85	​	$	0.50	​	$	0.26
Second quarter 2022	​	$	10.23	​	$	9.86	​	$	9.89	​	$	9.83	​	$	0.40	​	$	0.07

Holders of Quantum Units, Public Shares and Public Warrants should obtain current market quotations for their securities. The market price of Quantum’s securities could vary at any time before the Business Combination.

Holders

As of the Quantum Record Date, there were      holders of record of Quantum Units,      holders of record of Public Shares,      holders of record of Public Warrants,      holders of record of Sponsor Shares and      holders of record of Private Warrants. The number of holders of record does not include a substantially greater number of “street name” holders or beneficial holders whose Quantum Units, Public Shares and Public Warrants are held of record by banks, brokers and other financial institutions.

Dividends

Quantum has not paid any cash dividends to date and does not intend to pay cash dividends prior to Closing.

TRADESTATION

Market Price of TradeStation Shares and TradeStation Warrants

Historical market price information regarding TradeStation is not provided because there is no public market for its securities. TradeStation is applying to list the TradeStation Shares and TradeStation Warrants on the NYSE upon the Effective Time under the ticker symbols “TRDE” and “TRDE WS,” respectively.

Holders

As of the date of this proxy statement/prospectus, TradeStation had one holder of record.

Dividends

TradeStation authorized, on April 21, 2021, payment of a cash dividend of $23,737,998 to Monex (its sole shareholder) on or before June 30, 2021. Such cash dividend was paid on June 23, 2021.

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RISK FACTORS

Investing in TradeStation Shares involves a high degree of risk. You should carefully consider each of the following risk factors, as well as the other information in this proxy statement/prospectus, including TradeStation’s consolidated financial statements and the related notes and “TradeStation Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in TradeStation Shares. If any of the following risks actually occurs, TradeStation’s business, financial condition, prospects and results of operations could be materially adversely affected. In that event, the market price of TradeStation Shares could decline significantly and you could lose all or part of your investment. The risks described below are not the only risks TradeStation faces. Additional risks TradeStation is not presently aware of or that it currently believes are immaterial could also materially adversely affect its business, financial condition, prospects and results of operations. In that event, the market price of TradeStation Shares could decline, and you could lose part or all of your investment in TradeStation.

Risks Related to TradeStation’s Business

TradeStation’s results of operations and other operating metrics may fluctuate significantly from quarter to quarter, which could result in frequent volatility in its share price.

TradeStation’s results of operations are heavily reliant on the level of trading activity on its platform, TradeStation’s ability to grow and retain customer accounts, the value of the types of customer accounts it acquires and maintains, customer assets under custody, interest rates and market volume and volatility. In the past, TradeStation’s results of operations and other operating metrics have fluctuated from quarter to quarter due to changes in, or events or conditions related to, one or more of those factors. Such changes, events or conditions have included, and will likely include in the future, movements and trends in the underlying markets, changes in general economic conditions, changes in interest in investing generally, and in self-directed investing and trading in particular, changes in interest rates, and fluctuations in trading levels as to all asset classes or specific ones, each of which is outside its control and will continue to be outside of its control. There are also several factors within, or partially within, TradeStation’s control that can affect its results of operations on a quarter-to-quarter basis, including the timing and success of its marketing campaigns and sales efforts, and the attractiveness of its products and services generally and as compared to its competition as new products, services, enhancements, innovations and pricing plans are introduced, or fail to be introduced, by TradeStation and its competitors. As a result, period-to-period comparisons of TradeStation’s results of operations might not be meaningful, and TradeStation’s past results of operations should not be relied on as indicators of future performance. Further, TradeStation is subject to additional risks and uncertainties that are frequently encountered by companies in rapidly evolving and highly regulated markets, particularly in areas where regulation may be in early stages of development and consensus, such as cryptocurrencies and the increased presence of social media communities in the retail online brokerage space. TradeStation is also in the process of materially shifting its business strategy from one that is focused on positive net income to one that sacrifices positive net income in the near- to mid-term to try to achieve higher and accelerated revenue growth. For example, TradeStation had positive net income in each of the three fiscal years ended March 31, 2021, but had a net loss for fiscal 2022. TradeStation’s financial condition and results of operations in any given quarter can be influenced by numerous factors, many of which TradeStation is unable to predict or are outside of its control, which include, or could include:

•

TradeStation’s ability to increase its number of total customer accounts and revenue rapidly each quarter (and, in fact, in the second half of fiscal 2022 customer account growth has been lower than targeted);

•

TradeStation’s ability to attract new customers and retain existing customers, and the product mix used by its customers, which have different levels of revenue and profitability;

•

planned and unplanned increases in marketing, sales and other operating expenses, as well as higher-than-targeted account acquisition cost, that TradeStation may incur in its efforts to grow and expand its customer base and operations, and to remain competitive;

•

the success, or lack of success, in new marketing approaches TradeStation has recently undertaken or plans to undertake, which have not been previously or fully tested, as well as the success, or lack of

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success, and timeliness or untimeliness, in adjustments it makes to marketing in response to actual results in gross new accounts added and trading-related revenue achieved;

•

the continued market acceptance of TradeStation’s products and services in a highly competitive environment;

•

competitive pressure to reduce commissions, fees and other pricing, or increase economic incentives, offered to customers for opening and funding online brokerage accounts, and for trading stocks, ETFs, equity options, futures, futures options or cryptocurrencies, or reductions of the rates at which market makers will offer PFOF;

•

system disruptions, outages and other performance problems or interruptions on TradeStation’s platform, or breaches of data or system security, including ransomware or other major cyber attacks, which, if extended or severe, may harm TradeStation’s credibility and reputation in the market and result in loss of customer accounts and reduce its ability to acquire new customer accounts;

•

TradeStation’s failure to provide adequate customer service;

•

TradeStation’s ability to successfully, and in a timely manner, continue development, improvement and feature-enhancement of its products and services, including its intellectual property, data analytics, proprietary technology and customer support functions;

•

the timing and success of new product and service introductions, and new product and service features or enhancements, by TradeStation or its competitors, or other changes in the competitive landscape of its markets;

•

the success of TradeStation’s expansion into new markets, products and services, or ones in which it is in the early stages, such as cryptocurrency trading and customer engagement and activities in social media communities and environments;

•

trading activity in global markets or the demand for financial services generally, particularly by self-directed investors and traders, especially those who tend to trade more actively;

•

trading volume and volatility and the prevailing trading prices for any of the asset classes TradeStation offers its customers to trade, including cryptocurrencies, whose trading prices and volume can be highly volatile, which could, among other things, impact demand for its services, the magnitude of its customer assets under custody, and its growth strategy and business more generally;

•

large, uncollectible unsecured account debits or other unsecured, or insufficiently secured, debits or loan obligations owed to TradeStation by its customers, counterparties or other third parties, including customer unsecured debits that could arise from volatility or large or concentrated customer positions created or affected by major or sudden market, economic, political, national or global events or conditions, such as those that may arise relating to the Russian invasion of Ukraine that commenced February 24, 2022, and those that did occur as a result of a major volatility event that occurred on February 5, 2018 (on which day the CBOE Volatility Index (the “VIX”) rose from 17 to 37, the largest one-day movement in its history, and the Dow Jones Industrial Average declined 1,175 points, the largest one-day point movement in its history), which resulted in industry-wide, large unsecured customer debits in accounts with large positions or concentrations in certain holdings correlated to VIX, including approximately $5.9 million in TradeStation uncollected, unsecured customer debits in its fourth quarter of fiscal 2018);

•

changes in the adoption and use of cryptocurrencies and the public perception of them, including changes in perceptions and demands regarding cryptocurrencies as investment or trading vehicles;

•

changes in requirements imposed on TradeStation by regulators or by its counterparties across any or all of the asset classes TradeStation offers in accounts for trading and investing, including net capital, cash deposit, collateral, liquidity, permissible investment and other financial requirements imposed by the SEC, FINRA, DTC, NSCC, OCC and certain exchanges for equities accounts (which includes equity options), the CFTC, NFA and CME and other futures exchanges for futures accounts (which includes futures options), and, for digital assets, numerous U.S. state regulatory agencies and potentially certain federal regulatory authorities that may seek to assert this kind of jurisdiction over digital asset brokerages and exchanges;

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•

other changes in the legislative or regulatory environment, scope or focus of regulatory investigations and inquiries, or interpretations of regulatory requirements, or outright prohibition of certain activities, including in the cryptocurrency markets and with respect to the use of social media communities and PFOF arrangements;

•

disputes with TradeStation’s customers, adverse litigation and regulatory judgments, enforcement actions, settlements or other related costs and the reputational impact and public perception of such occurrences, including in emerging industries, or emerging components of industries, such as cryptocurrency investment and trading accounts and PFOF for equity and equity option orders used in connection with retail online trading;

•

the timing and amount of non-cash expenses, such as stock-based compensation and asset impairment;

•

fraudulent, unlawful or otherwise inappropriate customer behavior, such as when customers initiate deposits into their accounts, make trades on TradeStation’s platform using a short-term extension of credit from TradeStation, and then repatriate or reverse the deposits, resulting in a loss to TradeStation of the credited amount, or when fraudsters use misappropriated third-party information and assets to open an account or compromise an existing account resulting in possible losses;

•

TradeStation’s development of features or services, including certain types of brokerage or trading accounts, that may be the subject of regulatory criticism or form the basis for regulatory enforcement action, including regulatory actions to prohibit certain practices or features;

•

the overall tax rate for TradeStation’s business, which may be affected by new laws affecting the taxation or tax treatment of digital assets, transactional taxes or other tax treatment for trading in financial markets generally or for unrealized gains in financial services accounts;

•

changes in accounting standards, policies, guidance, interpretations or principles; and

•

general economic conditions in either domestic or international markets, including the impact of the ongoing COVID-19 pandemic.

Any one of the factors above or the cumulative effect of some of the factors above, or other factors, including the ones described below, may result in significant fluctuations in TradeStation’s results of operations and could have a material adverse effect on TradeStation’s business, financial condition, results of operations and prospects.

If TradeStation fails to retain existing customers, or fails to attract new customers in a cost-effective manner, who generate brokerage revenue (or fails to attract new customers in general), or if its customers decrease their use of its products and services, TradeStation’s account and revenue growth could be slower than it expects (and, in fact, in the second half of fiscal 2022 customer account growth was lower than expected), and its business may be materially harmed.

TradeStation’s continued business and revenue growth is dependent on its ability to attract and retain new customers who will generate brokerage revenue through commissions and/or net interest income, retain existing customers, and increase its customers’ use of its products and services, and TradeStation cannot provide any assurances that it will be successful in these efforts. The risk that these failures, if they occur, would materially harm TradeStation’s business and operating results is heightened by TradeStation’s recent strategy decision to incur near- to mid-term losses as a result of making significantly higher marketing and employee headcount expenditures to try to achieve accelerated, higher account and revenue growth, as well as using certain new marketing approaches or methods with which it has limited historical experience. There are a number of factors that could lead to a decline in TradeStation’s number of customers and revenue, or customers’ usage of TradeStation’s products and services, or that could prevent TradeStation from increasing its number of customers or revenue, including the various changes, events and conditions described directly above in the risk factor titled “TradeStation’s results of operations and other operating metrics may fluctuate significantly from quarter to quarter, which could result in frequent volatility in its share price.”

As TradeStation seeks to expand its business these and new challenges in attracting and retaining customers will arise that it may not successfully address. TradeStation’s success, and ability to increase

42

revenues and operate profitably, depend in part on its ability to cost-effectively acquire and retain new customers who will generate brokerage revenue, to retain existing customers and to keep existing customers engaged so that they continue to use its products and services. TradeStation’s customers may choose to cease using its platform, products and services at any time, and may choose to transfer their accounts to another broker-dealer, FCM, cryptocurrency exchange or broker, or financial institution. If TradeStation’s marketing efforts, including its recent increased investment in its marketing and use of certain approaches or methods with which it has limited historical experience, prove to be ineffective or TradeStation is unable to predict customer demands, retain current customers or attract and retain new customers, its customer base and revenue may grow more slowly than expected, may not grow at all or may decline, any of which may have a material adverse effect on its business, financial condition and results of operations.

For example, one of TradeStation’s recent marketing efforts to grow its cryptocurrency account base was an account-opening promotion commenced in December 2021 under which, once the customer’s application for a cryptocurrency account was approved, TradeStation Crypto provided the initial account funding on behalf of the customer in the form of Bitcoin having an approximate value of $10.00, even if the customer made no other initial account funding. This promotion began December 20, 2021 and ended April 30, 2022. As of March 31, 2022, only 3.5% of the total number of customer cryptocurrency accounts opened pursuant to this promotion had customer account activity subsequent to initial funding by TradeStation Crypto, such as additional cryptocurrency deposits or cryptocurrency purchases made in the account. This resulted in a decision by TradeStation not to include such accounts in TradeStation’s total customer account or gross new account metrics. Excluding such accounts (initially funded solely by Tradestation Crypto, that had no other customer account activity in fiscal 2022) which totaled approximately 45,000 at fiscal 2022 year-end, TradeStation’s total customer accounts were approximately 181,000 and its total cryptocurrency customer accounts were approximately 9,443. There is a substantial risk that a large majority of these approximately 45,000 inactive customer cryptocurrency accounts at fiscal 2022 year-end, with respect to which the customers have no obligation under the promotion to make any deposit or engage in further account activity, will remain inactive indefinitely. TradeStation Crypto expended considerable time and effort on this promotional offering, which, to date, has had limited success. Should TradeStation fail to adapt its marketing strategies or should TradeStation otherwise face similar challenges in its marketing efforts in the future it could have a material adverse effect on TradeStation’s business, financial condition and results of operations.

See, also below, “— If TradeStation is unable to manage its growth successfully, its financial performance may suffer and its brand and reputation may be harmed.”

If TradeStation is unable to manage its growth successfully, its financial performance may suffer, and its brand and reputation may be harmed.

TradeStation has significantly expanded in recent years. For example, it has grown from approximately 97,000 total customer accounts as of March 31, 2019 to approximately 181,000 as of March 31, 2022.

In fiscal 2022, particularly in the second half of the fiscal year, TradeStation began its efforts to try to grow accounts to a significantly higher number and at a faster quarterly rate. As TradeStation grows, assuming it is successful in doing so, its business will become increasingly complex. To effectively manage and capitalize on its growth, TradeStation must continue to manage and update its information technology and financial, operating and administrative systems and controls. In addition, as TradeStation grows, it may experience increased difficulty in hiring, training and managing a diffuse and growing employee base and ensuring such employees are adequately and timely trained so that they are productive, and properly follow TradeStation’s procedures and processes, including those required to maintain effective internal controls and regulatory compliance.

TradeStation’s continued growth could strain its existing resources, and it may not be able to manage and update its technology systems and infrastructure, or adequately train new employees (who are being hired at an accelerated rate), to accommodate increases in its business activity in a timely manner, which could lead to operational breakdowns and delays, loss of customers, a reduction in the growth of its customer base, increased operating expenses, decreased employee morale and productivity, financial losses, increased litigation or customer claims, regulatory sanctions or increased regulatory scrutiny, which could lead to

43

monetary or operational sanctions, such as fines or orders to stop accepting new users, or loss of bank relationships that could substantially impair or even suspend TradeStation’s operations.

These events may require substantial financial expenditures, commitments of resources, developments of TradeStation’s processes and other investments and innovations. If TradeStation does not successfully manage its growth, its reputation, business, financial condition and results of operations may be materially and adversely affected.

TradeStation’s business and reputation may be harmed by changes in business, economic or political conditions that impact financial markets, including systemic market events.

As a financial services company, TradeStation’s business, financial condition, results of operations and reputation are, or can be, directly and substantially affected by significant elements beyond TradeStation’s control, such as economic and political conditions, and national or global conditions or events, including (or that can impact or affect) unemployment rates, inflation, interest rates, recessions, tax rates, changes in the volatility in financial markets (such as the volatility in the First COVID Year), significant increases or decreases in the volatility or trading volume of particular securities, derivatives, cryptocurrencies or other financial products, broad trends in business and finance and changes in the markets in which such transactions occur and changes in how such transactions are processed. Some of these may be major or systemic events, such as the “dot.com bubble” crash which commenced in March 2000 and the “housing bubble” crash which commenced in 2007 to 2008, or events such as the more recent COVID-19 pandemic. These elements can arise suddenly, such as what occurred in the First COVID Year, and the full impact of such conditions can remain uncertain and sustained over long periods. Most recently, on February 24, 2022, the Russian Federation commenced a military invasion of Ukraine, and Russian actions with respect to Ukraine have resulted in certain broad sanctions being imposed by the United States, the European Union, the United Kingdom and other international authorities. TradeStation cannot predict the impact of Russian actions in Ukraine or the reaction to such actions by the United States, the European Union, the United Kingdom or other international authorities. Although TradeStation closed the very small number of TradeStation accounts held by customers who reside in Russia (and had closed the small number of TradeStation accounts held by customers who resided in Ukraine at the time of Russia’s 2014 invasion of Crimea), and has no suppliers, contractors or other counterparties in these jurisdictions, any prolonged civil unrest, political instability or uncertainty, military activities, or broad-based sanctions, should they continue over the long term or escalate, could result in significant market disruptions, weakness, slowdowns or dislocations. In addition, cybersecurity experts anticipate a meaningful increase in cyberattack and cybercrime activity in connection with the Russian invasion of Ukraine. A prolonged weakness in markets, such as a slowdown causing reduction in trading volume in securities, derivatives, cryptocurrencies or other financial product markets, would likely result in reduced revenues, and lower, no or negative net customer account growth, and have a material adverse effect on TradeStation’s business, financial condition and results of operations. Significant downturns in the securities, derivatives or cryptocurrency markets or in general economic and political conditions may also cause individuals to be reluctant to make their own investment decisions and thus decrease the demand for TradeStation’s products and services and could also result in its customers reducing their engagement with its platform. Any of these changes could cause TradeStation’s future performance to be uncertain or unpredictable, and could have a material adverse effect on its business, financial condition and results of operations.

The significant impacts on market volatility, volume and prices that can be caused by these types of events or conditions, particularly if they occur suddenly, can also cause large uncollectible, unsecured debits in customer accounts for which TradeStation may be responsible and may therefore incur losses. For example, the major volatility event that occurred on February 5, 2018 (on which day the CBOE Volatility Index (the “VIX”) rose from 17 to 37, the largest one-day movement in its history, and the Dow Jones Industrial Average declined 1,175 points, the largest one-day point movement in its history) resulted in large, industry-wide, unsecured customer debits in accounts with large positions or concentrations in certain holdings correlated to VIX, including, for TradeStation, approximately $5.9 million in uncollected, unsecured customer debits in the fourth quarter of fiscal 2018. Further, there could also be large, unsecured debit losses from sudden changes in the VIX or equities or futures markets in reaction to developments in the Russia invasion of Ukraine, such as the imposition or withdrawal of various types of economic sanctions, severe price fluctuations in energy prices and related commodities and securities (and derivatives of each), and

44

their impact on market prices of specific companies and market sectors most severely affected. See, also, “Risks Related to TradeStation’s Equities, Options and Futures Brokerage Products and Services — TradeStation’s exposure to credit risk with customers and counterparties could result in uncollectible unsecured debts and counterparty obligations and other potentially unrecoverable obligations owed to it.”

Intense competition in TradeStation’s industry led to “zero commission” plans for retail equity, options and ETF transactions. Should such commission elimination in TradeStation’s industry increase in scope, or begin to be offered with respect to the other asset classes TradeStation offers, such pricing pressure and any response TradeStation undertakes could materially and adversely harm its ability to generate revenue.

TradeStation competes in various asset markets based in part on its ability to execute its customers’ trades at competitive prices. Price competition in TradeStation’s industry has been, and continues to be, intense, and brokerage commissions and fees have steadily declined over the past two decades as a result. This price competition has become even more intense recently, with start-up brokerage firms entering the market offering zero or near-zero commissions for certain types of trades. This intense competition has led to zero commission offerings for certain retail trading transactions becoming commonplace in the U.S., where consumers increasingly cite low costs and ease of use as prominent attractions. TradeStation launched zero-commission equity and equity option trading in October 2019. With respect to equity options (as well as futures) trading, while TradeStation does not charge a transactional or “ticket” commission or fee it does charge a per-contract fee for each contract included in the customer’s trade, and there are also certain types of customer relationships, pricing plans and transactions that continue to include commissions or other fees charged by TradeStation, but there can be no assurance that price compression or elimination of some or all of these fees will not occur. For example, for some of TradeStation’s larger competitors’ brokerage commission revenues represent a relatively small portion of their total revenues, permitting them more easily to offer zero-commission plans and other incentives which they can use as “loss leaders” to attract customers to their primary and more-profitable products and services.

Should commission elimination in TradeStation’s industry increase in scope, or begin to be offered with respect to the other asset classes TradeStation offers for trading on its platforms (or the types of customer relationships, transactions or pricing plans that are subject to, or include, commissions or other fees in its offerings), TradeStation will experience more pressure on its commission or fee rates and revenue as a result of the competition it faces. TradeStation’s competitors could offer their services at lower prices, and it may be required to reduce its fees significantly to remain competitive. A decline in its commission or fee rates could lower its net trading income, which would adversely affect its profitability. See, also, “— TradeStation operates in highly competitive markets, and many of TradeStation’s competitors have greater resources than it does and may have products and services that may be more appealing than TradeStation’s to its current and potential customers.”

TradeStation operates in highly competitive markets, and many of TradeStation’s competitors have greater resources than TradeStation does and may have products and services that may be more appealing than TradeStation’s to its current and potential customers.

The markets in which TradeStation competes for self-directed traders and investors are evolving and highly competitive, with multiple participants competing for the same customers. TradeStation’s current and potential future competition principally comes from discount brokerages, established financial technology companies, venture-backed financial technology firms, banks, cryptocurrency exchanges, asset management firms and technology platforms. The impact of competitors with superior name recognition, greater market acceptance, larger customer bases or stronger capital positions could materially adversely affect TradeStation’s results of operations and customer acquisition and retention. TradeStation’s competitors may also be able to respond more quickly to new or changing opportunities and demands and withstand changing market conditions better than TradeStation can, especially larger competitors that may benefit from more diversified product and customer bases. In addition, competitors may conduct extensive promotional activities, offer better terms or offer differentiating products and services that could attract TradeStation’s current and prospective customers. TradeStation continues to experience price competition in its markets and may not be able to match the marketing efforts or prices of its competitors. TradeStation may also be subject to increased competition as its competitors enter into business combinations or partnerships, or established companies in other market segments expand to become competitive with its business.

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In addition, TradeStation competes in a technology-intensive market characterized by rapid innovation. Some of its competitors in this market, including new and emerging competitors, are not subject to the same regulatory requirements or scrutiny to which TradeStation is subject, which could place it at a competitive disadvantage, in particular in the development of new technology platforms or the ability to rapidly innovate. TradeStation may be unable to effectively use new technologies, adapt its products and services to emerging market standards or develop or introduce and market enhanced or new products and services. If TradeStation is not able to update or adapt its products and services to take advantage of the latest technologies and standards, or is otherwise unable to tailor the delivery of its services to the latest personal and mobile computing devices preferred by many of its customers, and to a growing portion of the self-directed investor market generally, or to provide products or services that are of a quality preferred by its customers and the self-directed investor market generally, it could have a material adverse effect on its ability to compete.

Further, after carefully considering, in consultation with various of its advisors, the regulatory issues and the historical and anticipated benefits to TradeStation’s business of rehypothecating or lending customer and TradeStation cryptocurrency assets and paying customers interest on their cryptocurrency account balances, TradeStation decided to discontinue all such activities effective June 30, 2022. As a result of this decision, with respect to loans of customer assets and payment of interest to customers, no such loans are outstanding nor interest accruing after June 30, 2022 and, with respect to proprietary loans of TradeStation cryptocurrency assets (all of which are USDC stablecoin and have fixed terms), no further loans have been originated or renewed since May 2022 and the loans which remain outstanding after July 1, 2022 (in the aggregate principal amount of $18 million) will terminate upon their respective maturity dates, including one $13 million loan that matures August 26, 2022 and one $5 million loan that matures January 30, 2023. TradeStation’s decision to discontinue such lending and interest payment activities could diminish the growth of its cryptocurrency account base or result in certain customers decreasing the amount of business they conduct with TradeStation, and may negatively affect TradeStation’s ability to compete with cryptocurrency exchanges and brokers that offer rehypothecation or lending of customer cryptocurrency assets or pay, customers interest on their cryptocurrency account balances, which could negatively impact TradeStation's business, financial condition and results of operations. See, “ — If TradeStation fails to retain existing customers, or fails to attract new customers in a cost-effective manner, who generate brokerage revenue (or fails to attract new customers in general), or if its customers decrease their use of its products and services, TradeStation’s account and revenue growth could be slower than it expects (and, in fact, in the second half of fiscal 2022 customer account growth was lower than expected), and its business may be materially harmed” and “Risks Related to TradeStation’s Cryptocurrency Products and Services — TradeStation offers to customers, as compared to most of its competitors, very few cryptocurrencies to invest in and trade, and TradeStation has recently decided to discontinue rehypothecating on lending customer and TradeStation cryptocurrency assets and paying customers interest on their cryptocurrency account balances, which may put it at a competitive disadvantage that will negatively affect its ability to grow its cryptocurrency investor customer base and cryptocurrency brokerage revenue.”

TradeStation’s competitive position within its markets could be materially adversely affected if TradeStation is unable to adequately address any of these factors, which could have a material adverse effect on its business, financial condition, results of operations and prospects.

A significant portion of TradeStation’s revenue depends on the interest income it can earn on its customers’ assets in its custody. TradeStation is therefore subject to interest rate changes in the market, which it does not control.

TradeStation has historically derived a significant portion of its brokerage revenues from interest income on customers’ credit balances and account borrowings, principally customers’ credit balances, the interest income on which is closely tied to industry rates such as federal funds target and effective rates and LIBOR. Very low rates of interest in the past few years have had, and have continued to have, a significant negative impact on TradeStation’s interest income and, therefore, TradeStation’s brokerage revenues, total net revenues and net income. Changes in interest rates can also affect the interest earned on interest-earning assets differently than the interest that TradeStation pays on its interest-bearing liabilities. Frequent changes in interest rates could have a material adverse effect on TradeStation’s quarter-to-quarter revenue and income. While TradeStation believes that the portion of its net interest income generated by interest

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earned on customer cash may increase in the next several fiscal quarters if the federal funds target and effective rates continue to increase over that period, such anticipated rate increases may not continue to occur, or may not occur with the frequency or duration or to the levels currently being forecast, or may decrease (due to, for example, a recession occurring or inflation beginning to decrease more quickly than anticipated, or the occurrence of other market conditions or events that may affect interest rate decisions). Further, even if interest rate increases do occur as anticipated, TradeStation’s ability to benefit from such increases may be affected by several factors, including (i) the actual amount of TradeStation’s average customer cash credit balances over time, which fluctuate, and may be affected by, among other things, (A) the mix in TradeStation’s customer base between active traders and less-active investors (as active traders typically have a higher percentage of account assets consisting of cash and higher cash balances as compared to less-active investors), (B) negative market conditions, such as a recession, that could occur as interest rates rapidly increase and which could result in customers reducing their account cash balances or closing their accounts or (C) changes in TradeStation’s total customer accounts or the average size of such accounts from period to period; (ii) TradeStation’s bank deposit and other short-term cash investment opportunities not offering interest rates which correspond to the interest rate benchmark increases, or TradeStation being unable to earn a corresponding interest rate in respect of cash deposits it is required to maintain with clearing organizations and exchanges; (iii) TradeStation’s ability to reinvest at such higher interest rates, when they are offered, in a timely fashion as such interest rate benchmark increases occur; (iv) interest rate swap agreements with banks, should TradeStation decide to enter into them, which lock-in interest rates for an extended period of time despite how they move in the market; and (v) the amount, if any, of earned interest on customer cash that TradeStation passes on to its customers (TradeStation currently does not pass on any of this earned interest to customers, but may in the future decide it needs to do so for competitive or other business reasons).

In addition, the expected phase-out of LIBOR could negatively impact TradeStation’s net interest income and could have other adverse effects. Certain of the credit agreements governing TradeStation’s outstanding indebtedness for borrowed money reference LIBOR as the benchmark rate to determine the applicable interest rate or payment amount. The discontinuation of LIBOR, the first phase of which began December 31, 2021 and is expected to continue in phases into 2023, may create uncertainty or differences in the calculation of the applicable interest rate or payment amount, depending on the terms of the governing instruments, and work will be required to transition to using the new benchmark rates and to implement necessary changes to TradeStation’s financial models. This could result in different financial performance for previously booked transactions and may impact TradeStation’s existing transaction data, products, systems, operations and pricing processes. The calculation of interest rates under the replacement benchmarks could also impact TradeStation’s net interest income. In addition, LIBOR may perform differently during the phase-out period than in the past and any LIBOR replacement may perform differently, which could result in different interest payments on TradeStation’s outstanding indebtedness and differences in TradeStation’s net interest income.

Because the majority of TradeStation’s revenue is transaction-based (including brokerage commissions and fees and PFOF), continued commission-and-fee price compression (or elimination), or reduced levels of market trading activity, volume or volatility, or regulatory changes that limit or eliminate any of these types of revenue, may result in slower or no growth, higher account acquisition cost and reduced revenue and profitability.

The majority of TradeStation’s revenue is transaction-based, in that TradeStation receives, based upon the applicable transaction-fee structure and order type, commissions and other transaction-based fees earned for executing trades for customers in stocks, ETFs, options, futures, futures options and cryptocurrencies, as well as PFOF for customer equity and equity option trades. The pressure on TradeStation to maintain and increase its transaction-based revenues is heightened when federal target (and corresponding) interest rates are very low (which, with the exception of a relatively short period, they have been since 2009), since net interest income is the only other major component of TradeStation’s revenue. TradeStation’s continued ability to grow and maintain its transaction-based revenue may be severely challenged by several factors, including continued commission-and-fee price compression, increased competition generally, economic or market downturns or other conditions or events that may reduce customer trading levels and interest in self-directed trading in general, regulatory or market changes that reduce or eliminate the revenue TradeStation

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can make from PFOF, fully paid securities lending, cryptocurrency lending and customer trades generally, new taxes or tax treatments regarding brokerage accounts or brokerage account assets and other factors or events.

TradeStation conducts best execution analysis and maintains policies and procedures to mitigate potential conflicts of interest when routing customer orders. However, such best execution analyses, policies and procedures may not be sufficient to mitigate potential conflicts of interest that TradeStation or its market makers may have in order routing and order execution as a result of PFOF arrangements. Any actual or perceived conflict of interest could have a material adverse effect on TradeStation’s business, financial condition and results of operations. TradeStation does not receive any PFOF or transaction rebates for customer futures or cryptocurrency orders.

PFOF constitutes a significant portion of TradeStation’s transaction-based revenue. Following the shift to offering zero-commission accounts, PFOF represented approximately 30% and 33% of TradeStation’s trading-related revenue for fiscal 2021 and fiscal 2022, respectively, and 23% and 26% of TradeStation’s total net revenues for fiscal 2021 and fiscal 2022, respectively, and TradeStation expects revenue derived from PFOF to represent as much as approximately 30% to 36% of TradeStation’s trading-related revenue in the next two fiscal years. Several factors, including regulatory changes, in the marketplace may result in a decrease in, or the elimination of, TradeStation’s PFOF, explained in more detail as follows:

Risks to PFOF Related to TradeStation’s Business Relationships with Market Makers

TradeStation’s PFOF comes from arrangements with market makers for its customers’ equity and equity option trades, which do not have guaranteed terms. If any of these market makers are unwilling to continue to receive orders from TradeStation or to pay TradeStation for those orders, or are willing only to pay TradeStation lower rates and if TradeStation is unable to find replacement market makers in a timely manner or if such replacement market makers are not willing to pay it for such orders at the current rates, TradeStation’s trading-related revenue would be impacted negatively. Any decrease in trading-related revenue from market makers could have a material adverse effect on TradeStation’s business, financial condition and results of operations.

Risks Related to Regulation of PFOF

Notwithstanding the efforts TradeStation has made to eliminate conflicts of interest between its PFOF arrangements and its duty to seek best execution to its customers, PFOF practices have drawn heightened scrutiny from the U.S. Congress, the SEC, FINRA, state regulators and other regulatory and legislative authorities. For example, in November 2018 the SEC amended its rules relating to broker-dealer disclosure of order handling and routing to require that, among other things, such public disclosures must now describe additional detail regarding terms of PFOF arrangements and profit-sharing relationships that may influence a broker-dealer’s routing decision, including information about average rebates the broker received from, and fees the broker paid to, trading venues. Additionally, PFOF practices were the subject of a line of critical questioning during February 18, 2021, May 6, 2021 and September 14, 2021 U.S. Congressional hearings related to, among other issues, gamification and extreme volatility in certain popular equities in the first half of 2021. Those hearings resulted in an investigation by the House Committee on Financial Services, which, in its resulting report published in June 2022, recommended policy changes that would be aimed at allowing regulators to better understand any influx of retail traders, enhance supervision of retail facing “superbrokers” and strengthen capital and liquidity requirements and oversight. The SEC or other regulatory authorities or legislative bodies may adopt additional regulation, legislation or guidance relating to PFOF practices as a result of such heightened scrutiny or otherwise, including regulation that could substantially limit or ban such practices, or pursue additional inquiries or investigations relating to PFOF practices. For example, in May 2019, FINRA commenced an investigation into TradeStation’s best execution and PFOF practices, alleging, among other things, that TradeStation did not conduct a regular and rigorous review of its execution quality. The investigation resulted in a settlement (in connection with which TradeStation neither admitted nor denied those allegations) and payment of an $850,000 fine and censure. In addition, in November 2021, the Attorney General of the Commonwealth of Massachusetts sent an information request regarding TradeStation’s PFOF and best execution practices. Any new or heightened PFOF regulation may result in increased compliance costs and otherwise may materially decrease

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TradeStation’s transaction-based revenue. Because certain of TradeStation’s competitors either do not receive PFOF or derive a lower percentage of their revenues from PFOF than does TradeStation, any such heightened regulation or ban of PFOF could have an outsized impact on TradeStation’s results of operations. Additionally, if TradeStation’s customers or potential customers believe that they may get better execution quality (including better price improvement) directly from stock exchanges or from TradeStation’s competitors that have different execution arrangements, or if they perceive PFOF practices to create a conflict of interest between their brokerage and them, they may favor TradeStation’s competitors. Further, depending on the nature of any new requirements, heightened regulation could also increase TradeStation’s risk of potential regulatory violations and civil litigation, which could result in judgments, fines or other penalties, as well as negative publicity.

Risks Related to Negative Publicity Associated with PFOF and Market Makers

As registered broker-dealers, market makers must comply with rules and regulations that are generally intended to prohibit them from taking advantage of information they obtain while handling and executing orders (such as through the prohibition on “front running”). The rules and regulations also require market makers to seek “best execution” of customers’ equity and equity option orders TradeStation sends to them. However, there is a potential conflict of interest between market makers’ best execution duty and their own revenue arrangements. If the market makers TradeStation uses to execute its customer’s equity and equity option trades were to violate such rules and regulations it could result, among other things, in negative publicity for TradeStation, as well as costly examinations, enforcement actions and potential lawsuits. If TradeStation’s customers begin to disfavor PFOF and similar practices generally or the specific market makers with whom TradeStation does business due to any negative media attention, such customers may have an adverse view of TradeStation’s business model and decide to limit or cease the use of TradeStation’s platform. Additionally, some customers may prefer to invest through TradeStation’s competitors that do not engage in PFOF or engage in them differently than TradeStation does. Any such loss of customer engagement as a result of any negative publicity associated with PFOF or similar practices could have an adverse effect on TradeStation’s business, financial condition and results of operations.

Any of these described factors which could reduce or eliminate TradeStation’s PFOF could have a material adverse effect on TradeStation’s business, financial condition and results of operations.

For more information about the regulation of TradeStation’s PFOF practices, as well as certain other sensitive regulatory issues, see “— Risks Related to Regulation and Litigation — Public officials have signaled an increased focus on new or additional regulations that could impact TradeStation’s business and require TradeStation to make significant changes to its business model and practices, including with respect to social communities, PFOF, cryptocurrency lending, paying cryptocurrency interest on customer cryptocurrency account balances and custody of cryptocurrencies. Changes in these regulations, or interpretations thereof by regulators, failure to comply with these regulations, or proceedings and investigations related thereto, could harm its business, financial condition and results of operations.”

TradeStation’s growth will depend, in part, on the success of its important relationships with third parties, including critical vendors and third-party relationships related to marketing, lead referrals, account growth and self-clearing. Overreliance on certain third parties, or TradeStation’s inability to maintain or extend existing relationships or establish new relationships on favorable terms or at all, may cause unanticipated costs or decreased account growth and revenue, negatively impact customer awareness of, or engagement with, TradeStation, and impact TradeStation’s financial performance in the future.

TradeStation relies on third parties in connection with many aspects of its business, including third-party platforms and vendors in order to promote its brands and its product offerings and attract customers to its platform. These relationships, which include and are planned to include providers of online services, search engines, social media, directories and other websites and fintech and e-commerce businesses, help drive prospective customers to TradeStation’s platform. While TradeStation believes that if there is a loss or significant reduction in one or more of these relationships there are other third parties that could drive customers to its platform, adding or transitioning to them may disrupt TradeStation’s business and increase its costs. Also, TradeStation does have one disproportionately large relationship with a third-party platform and social community provider that funnels many new account leads to TradeStation which, should the

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relationship unexpectedly terminate, would likely be difficult to replace in the short term, or possibly at all. In the event that any of TradeStation’s existing relationships or future relationships fail to provide services to it in accordance with the terms of its arrangements, or at all, and TradeStation is not able to find suitable alternatives in a timely manner, this could impact its ability to attract and retain consumers in a cost-effective manner and adversely affect its business, financial condition and results of operations and prospects.

TradeStation also relies on third parties that provide data center facilities, infrastructure, back-office systems for clearance, settlement and accounting (such as FIS’s Phase3 and GMI systems), cryptocurrency platform, middle-office and custody software and services, customer relationship management (CRM), compliance and risk software and systems, website functionality and access, components and services, including databases and data center facilities and cloud computing, all of which are critical to its operations. When TradeStation outsources certain of its operations, it must perform enhanced due diligence of those third parties and must monitor such outsourced functions.

Because of the inherent risk in TradeStation’s reliance on third parties to provide these services and to facilitate certain of its business activities, TradeStation faces increased operational risks. Although TradeStation monitors these third parties, it does not control their operation, including the operation of the data center facilities TradeStation uses. These third parties may be subject to financial, legal, regulatory and labor issues, cybersecurity incidents, break-ins, computer viruses, denial-of-service attacks, sabotage, acts of vandalism, privacy breaches, service terminations, disruptions, interruptions and other misconduct. They are also vulnerable to damage or interruption from human error, power loss, telecommunications failures, fires, floods, earthquakes, hurricanes, tornadoes, pandemics (including the COVID-19 pandemic) and similar events. The failure of TradeStation’s third-party service providers to perform their service level and other obligations and provide the products and services it obtains from them in a timely manner for any reason could materially adversely affect TradeStation’s operations and profitability.

In addition, these third parties may breach their agreements with TradeStation, disagree with TradeStation’s interpretation of contract terms or applicable laws and regulations, refuse to continue or renew these agreements on commercially reasonable terms or at all, fail or refuse to process transactions or provide other services adequately, take actions that degrade the functionality of TradeStation’s services, impose additional costs or requirements on TradeStation or its customers, or give preferential treatment to competitors. There can be no assurance that third parties that provide services to TradeStation or for the direct or indirect benefit of TradeStation’s customers will continue to do so on acceptable terms, in an acceptable manner or at all. If any third parties do not adequately or appropriately provide their services or perform their responsibilities to TradeStation or for the benefit of TradeStation’s customers, fail to perform as expected, or experience other unanticipated problems, TradeStation may be unable to procure alternatives in a timely and efficient manner or on acceptable terms, or in the case of specialized or single source providers, at all. TradeStation may be subject to business disruptions, losses or costs to remediate any of the deficiencies, customer dissatisfaction, reputational damage, legal or regulatory proceedings or other adverse consequences, any of which could materially harm its business, financial condition and results of operations.

Because TradeStation provides real-time services in volatile markets, its customers are exposed to the risk of loss on their investments and positions, and customer satisfaction may be severely negatively impacted as a result, which may lead to an increased risk of higher account attrition, which could result in lower or negative net account growth, customer complaints, litigation and reputational harm.

TradeStation is more susceptible to customer dissatisfaction and to losing customers if customers are not able to execute trades as desired or achieve desired results. In case of sudden, large price movements, some leveraged market participants may not be able to meet their obligations to TradeStation or other brokers who, in turn, may not be able to meet their obligations to their counterparties. TradeStation calculates leverage requirements for each of its customers on a continuous basis across all product classes for which leverage is available to customers. When there is turbulence in the global economy, as there has been recently and will likely occur in future periods (which cannot be accurately predicted), TradeStation faces increased risk of default by its customers and other counterparties.

Because of these risks, TradeStation is highly susceptible to customer dissatisfaction or even customer loss if customers are not able to execute trades as desired or if customers experience losses in their portfolios.

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Customer dissatisfaction could lead to an increased risk of customer complaints and litigation, including the risk that customers escalate complaints to regulators. There can be no assurance that provisions typically included in TradeStation’s agreements with its customers that attempt to limit its exposure to such claims would be enforceable or adequate or would otherwise protect it from liabilities or damages with respect to any particular claim or group of claims. Even if not successful, a claim brought against TradeStation by any of its customers could be time-consuming and costly to defend and could seriously damage TradeStation’s reputation and brand and could have a material adverse impact on its business, financial condition and results of operations. See also “— Risks Related to Regulation and Litigation — TradeStation is subject to legal proceedings and claims in the ordinary course of its business, which could cause it to incur significant legal expenses. An adverse resolution of any future legal proceedings or claims could result in a negative perception of it and have a material adverse effect on its business, financial condition and results of operations.”

TradeStation may require additional capital to satisfy its liquidity needs and support its business growth and objectives, and this capital might not be available to use on reasonable terms, if at all, and may result in stockholder dilution and limitations to TradeStation’s business and operations.

Maintaining adequate liquidity is crucial to TradeStation’s securities brokerage, as well as TradeStation’s cryptocurrency brokerage, including, particularly with respect to its securities and futures brokerage and self-clearing operations, key functions such as transaction settlement, custody requirements and margin lending. TradeStation meets its liquidity needs primarily from working capital and cash generated by customer activity, as well as from external debt financing. Increases in the number of customers, fluctuations in customer cash or deposit balances, as well as market conditions or changes in regulatory treatment of customer assets under custody, may affect TradeStation’s ability to meet its liquidity needs.

A reduction in TradeStation’s liquidity position, including as a result of the unavailability of amounts to be borrowed under its lines of credit, could reduce TradeStation’s customers’ confidence in it, which could result in the withdrawal of customer assets and loss of customers, or could cause TradeStation to fail to satisfy broker-dealer or other regulatory capital guidelines, which may result in immediate suspension of securities activities, regulatory prohibitions against certain business practices, increased regulatory inquiries and reporting requirements, increased costs, fines, penalties or other sanctions, including suspension or expulsion by regulators, and could ultimately lead to the liquidation of TradeStation’s broker-dealer or other regulated entities. Factors which may adversely affect TradeStation’s liquidity positions include temporary liquidity demands due to timing differences between brokerage transaction settlements and the availability of segregated cash balances, timing differences between cryptocurrency transaction settlements between TradeStation and its cryptocurrency market makers and between TradeStation and its cryptocurrency customers, fluctuations in cash held in customer accounts, a significant increase in TradeStation’s margin lending activities, increased regulatory capital requirements, changes in regulatory guidance or interpretations, other regulatory changes or a loss of market or customer confidence resulting in unanticipated withdrawals of customer assets under custody.

In addition to requiring liquidity for TradeStation’s securities brokerage business, cryptocurrency business and TradeStation’s other regulated businesses, TradeStation may also require additional capital to continue to support the growth of its business and respond to competitive challenges, including the need to promote its products and services, develop new products and services, enhance its existing products, services and operating infrastructure, and acquire and invest in complementary businesses and technologies.

When available cash is not sufficient for its liquidity or growth needs, TradeStation may need to engage in equity or debt financings to secure additional funds. There can be no assurance that such additional funding will be available on terms attractive to TradeStation, or at all, and TradeStation’s inability to obtain additional funding when needed could have a material adverse effect on its business, financial condition and results of operations.

If additional funds are raised through the issuance of equity or convertible debt securities, TradeStation Stockholders could suffer significant dilution, and any new shares TradeStation issues in connection therewith could have rights, preferences or privileges superior to those of its current stockholders. Any debt financing secured by TradeStation in the future could involve restrictive covenants relating to its capital-raising activities and other financial and operational matters, which may make it more difficult for TradeStation to obtain additional capital and to pursue future business opportunities. See, also “— Risks Related to

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TradeStation’s Equities, Options and Futures Brokerage Products and Services — If TradeStation does not maintain its capital levels, or does not satisfy its cash deposit, collateral, custody, liquidity and settlement obligations, as required under applicable laws and regulations and by applicable regulators, its equities, options and futures brokerage businesses may be restricted and it may be fined or subject to other disciplinary or corrective actions or even being liquidated or wound down” and “— Risks Related to TradeStation’s Cryptocurrency Products and Services — Any inability on its part to maintain adequate relationships with licensors of its cryptocurrency brokerage technology, cryptocurrency custody providers or cryptocurrency liquidity providers, or other relevant vendors or service providers, could negatively impact its operations.”

TradeStation’s substantial indebtedness could adversely affect its ability to service its substantial indebtedness, raise additional capital to fund its operations, limit its ability to react to changes in the economy or in its industry and expose it to interest rate risk to the extent of its variable rate debt.

As of March 31, 2022, TradeStation had $278.0 million of indebtedness. TradeStation’s substantial indebtedness could have important consequences, including: requiring it to utilize a substantial portion of its cash flows from operations to make payments on its indebtedness, reducing the availability of its cash flows to fund working capital, capital expenditures, product development, acquisitions and general corporate and other purposes; increasing its vulnerability to adverse economic, industry or competitive developments; exposing it to the risk of increased interest rates; limiting its ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes; and limiting its flexibility in planning for, or reacting to, changes in its business or market conditions.

In addition, TradeStation’s obligations under its indebtedness are guaranteed by Monex. In the event that Monex’s ownership level in TradeStation decreases such change will require consent from TradeStation’s third-party lenders. Any default or other issues that arise with respect to Monex’s guarantee could have a material adverse effect on TradeStation’s business, financial condition and results of operations.

Proposed legislation that would impose taxes on certain financial transactions could, if adopted, reduce TradeStation’s new account growth and account retention, customer activity, trade volume and revenue and could increase TradeStation’s expenses.

Certain members of the U.S. Congress and individual state legislatures have proposed the imposition of new taxes on a broad range of financial transactions, including transactions that occur on TradeStation’s platform, such as the buying and selling of stocks and derivative transactions. For example, the Wall Street Tax Act of 2021, H.R. 328, which was introduced into the U.S. Congress in January 2021, would impose a 0.1% excise tax on certain covered transactions. If enacted, such financial transaction taxes could increase the cost to customers of investing or trading on TradeStation’s platform and reduce or adversely affect U.S. market conditions and liquidity, general levels of interest in investing or the volume of trades and other transactions from which TradeStation derives revenues. While it is difficult to assess the impact the proposed taxes could have on TradeStation, if a financial transaction tax is implemented in any jurisdiction in which TradeStation operates, its business, financial condition or results of operations could suffer a material adverse effect. In addition, a comprehensive infrastructure bill was recently enacted into law which includes provisions requiring brokers to report to the IRS information on cryptocurrency transactions of more than $10,000. These new tax reporting provisions or any new tax requirements could adversely affect TradeStation’s new account growth and account retention, customer activity, trade volume and revenue, which could adversely affect TradeStation’s business, financial condition and results of operations.

TradeStation’s operations expose it to liability for errors in execution and clearing functions which could cause losses, regulatory enforcement fines and sanctions and reputational harm.

TradeStation’s broker-dealer/FCM subsidiary provides trade, execution and clearing services, which include the order placement and management, confirmation, receipt, settlement and delivery functions involved in securities and futures transactions. Clearing brokers also assume direct responsibility for the control of customer securities and other assets and the clearance of customer securities and futures transactions. Self-clearing securities and futures firms are subject to substantially more regulatory control and examination than introducing brokers that rely on others to perform clearing functions. Errors in

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performing clearing functions, including clerical and other errors related to the handling of funds and securities or futures held by TradeStation on behalf of customers, could lead to (i) civil penalties, as well as losses and liability as a result of related lawsuits brought by customers and others and any out-of-pocket costs associated with remediating customers for any losses incurred in connection therewith, (ii) the risk of fines or other regulatory actions by regulators and (iii) harm to TradeStation’s reputation. See “— Risks Related to Regulation and Litigation — The nature of TradeStation’s business, particularly as a self-clearing brokerage firm for equities, options and futures, requires it to be in compliance with numerous, complex and changing regulatory frameworks, rules and regulations imposed by numerous and distinct regulatory authorities and to maintain a significant regulatory financial and operations compliance infrastructure. Changes in these laws and regulations, failure to comply with these laws and regulations, and proceedings and investigations related thereto, could harm TradeStation’s business, financial condition and results of operations.”

TradeStation is exposed to risks associated with its non-U.S. business, including, among others, the failure to maintain all necessary approvals, consents, licenses or registrations required to operate such non-U.S. business, unexpected changes in regulatory requirements, expropriations, fluctuations in currency exchange rates, limitation on the import and export of currency and political, social and economic instability.

As of March 31, 2022, approximately 20% of TradeStation’s customer accounts were held by customers who reside outside the U.S. TradeStation’s business is subject to risks associated with attracting and providing services to non-U.S. customers and may be harmed by global events beyond TradeStation’s control, including changes in regulatory requirements, expropriations, fluctuations in currency exchange rates, limitation on the import and export of currency and political, social and economic instability, which could impact trading activity, account growth or retention or could result in lower income. TradeStation currently has an introducing broker subsidiary located in the U.K. and a product development subsidiary located in Costa Rica. Having these non-U.S. operating entities, as well as having direct or “B2B” customer relationships in countries in Europe, the Middle East, the Asia-Pacific region and other regions, subjects TradeStation to multiple risks, for example:

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differing economic and political conditions;

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differing local product preferences and product requirements;

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potentially negative consequences from changes in or changing interpretations of laws, including customer protection, data protection, privacy, financial services, tax and other laws or regulations;

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geopolitical events, including natural disasters, public health issues, acts of war, nationalism and terrorism, social unrest or human rights issues;

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partial or total expropriation of assets;

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fluctuations in currency exchange rates;

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trade protection measures, including tariffs or import-export, currency or foreign exchange restrictions; and

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enforceability and protection of intellectual property and contract rights.

Violations of the complex foreign laws, rules, regulations and interpretations that apply to TradeStation’s international business may result in fines, criminal actions or sanctions against us, prohibitions on the conduct of TradeStation’s business, or damage to its reputation. Although TradeStation has implemented policies and procedures designed to promote compliance with these laws, violations could nevertheless occur. These risks are inherent in TradeStation’s international business and may increase TradeStation’s costs of doing business internationally and could harm its reputation. In addition, TradeStation may in the future undertake projects and make investments in countries or regions in which it has little or no previous investment or operating experience. TradeStation may not be able to fully or accurately assess the risks of investing in such countries or may be unfamiliar with the laws and regulations in such countries governing its investments and operations. Demand also could differ materially from TradeStation’s expectations as a result of local economic and political conditions or currency fluctuations. As a result, TradeStation may be unable to effectively implement its strategy in new jurisdictions. See also “— Risks Related to Regulation and Litigation.”

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The loss of key employees could decrease the quality of TradeStation’s management and operations.

TradeStation’s future success depends, in part, upon the continued service of its key senior management and technology maintenance and development personnel. Recruitment efforts in the financial services industry have recently been aggressive and intense, including recent significant and unanticipated increases in average employee expense. The loss of the services of one or more of these key employees could have a material adverse effect on TradeStation. There can be no assurance that TradeStation will be able to retain its key personnel. Departures and additions of personnel, to the extent disruptive, as well as substantial additional and sustained increases in employee expense to attract and retain employees, could have a material adverse effect on TradeStation’s business, financial condition and results of operations.

TradeStation conducts its brokerage and other business operations through subsidiaries and relies primarily on dividends from its subsidiaries for its cash flows.

TradeStation depends on dividends, distributions and other payments from its subsidiaries to fund payments on its obligations, including any debt obligations it may incur. Regulatory and other legal restrictions may limit TradeStation’s ability to transfer funds to or from certain subsidiaries. These laws and regulations may hinder TradeStation’s ability to access funds that it may need to make payments on its obligations, including any debt obligations it may incur, and conduct its business. In addition to negatively affecting its business, a significant decrease in TradeStation’s liquidity could reduce investor confidence in TradeStation. Certain rules and regulations may limit the extent to which TradeStation’s broker-dealer/FCM subsidiary may distribute capital to it. For example, under FINRA rules applicable to TradeStation’s broker-dealer subsidiary, a dividend in excess of 10% of a member firm’s excess net capital may not be paid without FINRA’s prior written approval. Compliance with these rules may impede TradeStation’s ability to receive dividends, distributions and other payments from its broker-dealer subsidiary.

TradeStation’s failure to properly handle cash, securities or cryptocurrencies held on behalf of customers could harm its business and reputation and result in legal and regulatory action.

TradeStation’s ability to hold, handle and account accurately for the cash, securities and cryptocurrencies in its customers’ accounts requires a high level of account control policies and procedures, and TradeStation’s success requires significant customer confidence in its ability to do so. As TradeStation’s business continues to grow and as it expands its products and services, it must continue to strengthen its associated account control policies and procedures. Any failure to maintain the necessary controls or to manage TradeStation customers’ funds or securities safely and accurately could result in significant reputational harm, lead customers to discontinue or reduce their use of TradeStation’s products or services or result in regulatory actions, including significant penalties or fines, which could have a material adverse effect on TradeStation’s business, financial condition and results of operations.

Future acquisitions of, or investments in, other companies, products, technologies or specialized employees, should TradeStation decide to engage in such transactions, could require significant management attention, disrupt TradeStation’s business, dilute stockholder value and adversely affect TradeStation’s business and operations.

As part of its business strategy, TradeStation may decide to make acquisitions of, or investments in, as applicable, specialized employees or other compatible companies, products or technologies. TradeStation also may enter into relationships with other businesses in order to expand its products and services. Negotiating these transactions can be time-consuming, difficult and expensive and TradeStation’s ability to close these transactions may be subject to third-party approvals, such as government and other regulatory approvals, which are beyond its control. Further, TradeStation may not be able to find suitable acquisition or investment candidates and TradeStation may not be able to complete acquisitions on favorable terms, if at all. Moreover, these kinds of acquisitions or investments may result in unforeseen operating difficulties and expenditures, including disrupting TradeStation’s customer account and revenue growth strategy and ongoing operations, diverting management from their primary responsibilities, subjecting TradeStation to additional liabilities, increasing its expenses and adversely impacting its business, financial condition and results of operations. If TradeStation acquires businesses or technologies, it may not be able to integrate the acquired personnel, operations and technologies successfully, or effectively manage the combined business following the

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acquisition. Moreover, TradeStation cannot assure that the anticipated benefits of any acquisition or investment would be realized or that it would not be exposed to unknown liabilities.

In connection with these types of transactions, TradeStation may issue additional equity securities that would dilute its stockholders, use cash that it may need in the future to grow organically and operate its business, incur debt on terms unfavorable to it or that it is unable to repay, incur large charges or substantial liabilities, encounter difficulties integrating diverse business cultures and become subject to adverse tax consequences, substantial depreciation or deferred compensation charges. These challenges related to acquisitions or investments could have a material adverse effect on TradeStation’s current growth strategy, as well as on its business, financial condition and results of operations.

Unfavorable media coverage, both traditional and social, could harm TradeStation’s business, financial condition and results of operations.

TradeStation’s industry receives a relatively high volume of media coverage, from both traditional and social media sources, which has increased as the individual trader market has grown. As a result, TradeStation may receive negative media coverage regarding its products and services, inappropriate or otherwise unauthorized behavior by its customers and litigation or regulatory activity. In addition, any unanticipated system disruptions, outages, technical or security-related incidents or other performance problems relating to its platform may receive media attention. Furthermore, any negative experiences TradeStation’s customers have in connection with their use of its products and services, including as a result of any such performance problems, could diminish customer confidence in TradeStation and its products and services, which could result in unfavorable media coverage or publicity.

Unfavorable publicity could adversely affect TradeStation’s reputation. If and as public awareness of TradeStation’s brand increases, issues that draw adverse media coverage could have an amplified negative effect on its reputation and brand as well as TradeStation’s growth. Any such negative publicity could also have an adverse effect on the engagement and loyalty of TradeStation’s customer base, as well as on TradeStation’s ability to recruit and retain personnel, and result in decreased revenue or revenue growth rates, or no or negative growth in customer accounts and revenue, which could have a material adverse effect on TradeStation’s business, financial condition and results of operations.

The continuing and long-term impact of the COVID-19 pandemic on TradeStation’s business, financial condition and results of operations is uncertain and may be materially adverse.

During the First COVID Year, TradeStation saw substantial growth in its customer base, retention, engagement and trading activity metrics, as well as continued gains and periodic all-time highs achieved by markets generally. During this period, market volatility, the COVID-19 Measures and increased interest in investing and personal finance helped foster an environment that encouraged traders and investors to become TradeStation customers and begin trading on the TradeStation platform as well as encouraged TradeStation’s existing customers to become more engaged with its platform. After the First COVID Year, as many of the COVID-19 Measures began to be relaxed, retail trading activity, and growth in account opening, began to slow, as a result of which TradeStation may not be able to maintain the customer base it gained, or the rate of growth in its customer base that it experienced, during the First COVID Year. In fact, TradeStation’s results for fiscal 2022 indicate a return to trading and other activity at levels consistent with the levels seen prior to the First COVID Year. Additionally, to the extent that government stimulus measures enacted in response to the pandemic have contributed to the increase in customer engagement, there could be a negative impact on future customer engagement if no additional stimulus measures are taken. Further, if the financial markets experience a downturn, TradeStation may have difficulty attracting and retaining customers who elect not to continue to invest in the financial markets as a result of any such downturn, a lack of access to additional stimulus funds (if any), the ability to resume pre-COVID-19 activities or otherwise. To the extent that customer behaviors continue to track to pre-First COVID Year behaviors, as experienced in fiscal 2022, and these metrics do not improve, or the financial markets experience additional volatility or decline, there could be a material adverse effect on TradeStation’s business, financial condition and results of operations.

Notwithstanding the foregoing, the COVID-19 pandemic and the various measures instituted by governments and businesses to mitigate its spread, including travel restrictions, stay-at-home orders and

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quarantine restrictions, could adversely impact TradeStation’s customers, employees and business partners and continue to disrupt its operations, including if the pandemic contributes to a general slowdown in the global economic recovery. The extent of the impact of COVID-19 on TradeStation’s business, financial condition and results of operations will depend largely on future developments, including the continued duration of the pandemic, the spread of variants, such as the most recent omicron variant which has followed the delta variant, actions taken to contain COVID-19 or address its impact, the ability to reintegrate its workforce or of its workforce to adapt to the long-term distributed workforce model (with some employees part- or full-time remote, and others not) TradeStation expects to adopt, vaccine mandates, the impact on capital and financial markets and the related impact on the financial circumstances of its customers, all of which are highly uncertain and cannot be predicted. Even after the COVID-19 pandemic subsides, TradeStation may continue to experience adverse impacts to its business as a result of the global economic impact, including the availability of credit, adverse impacts on its liquidity and any recession that has occurred or may occur in the future. A sustained or prolonged COVID-19 pandemic or a continued resurgence could exacerbate the factors described above and adversely impact TradeStation’s business, financial condition and results of operations.

Risks Related to TradeStation’s Equities, Options and Futures Brokerage Products and Services

If TradeStation does not maintain its capital levels, or does not satisfy its cash deposit, collateral, custody, liquidity and settlement obligations, as required under applicable laws and regulations and by applicable regulators, its equities, options and futures brokerage businesses may be restricted and it may be fined or subject to other disciplinary or corrective actions or even being liquidated or wound down.

The SEC, FINRA, CFTC and other SROs have stringent rules with respect to the maintenance of specific levels of net capital and clearinghouse deposits by securities broker-dealers. If TradeStation’s broker-dealer/FCM subsidiary fails to maintain specified levels of capital, TradeStation’s ability to settle trades through the DTC, NSCC or OCC may be suspended or TradeStation may be forced to restrict trading in certain stocks in order to limit clearinghouse deposit requirements, or TradeStation could be subject to immediate suspension or revocation of registration, and suspension or expulsion could ultimately lead to the liquidation or winding down of its broker-dealer/FCM business. If such net capital rules are changed or expanded, if there is an unusually large charge against net capital, or if TradeStation makes changes in its business operations, including as a result of market volatility or its account growth, that increase its capital requirements, then operations which require an intensive use of capital could be limited. A large operating loss or charge against net capital could have a material adverse effect on TradeStation’s ability to maintain or expand its business.

In addition to regulatory net capital requirements, TradeStation’s broker-dealer/FCM subsidiary is subject to cash deposit and collateral requirements under the rules of the DTC, NSCC, OCC and certain exchanges, as well as similar regulatory requirements for its futures business, which may fluctuate significantly from time to time based upon the nature and size of customers’ trading activity and market volatility. If TradeStation’s broker-dealer/FCM subsidiary fails to meet any such deposit, collateral or similar requirements, its ability to settle trades may be suspended or restricted, clearinghouses and exchanges may refuse to clear and settle TradeStation’s trades on behalf of its customers and TradeStation may be exposed to significant losses or disruptions.

Regulators continue to evaluate and modify regulatory capital requirements from time to time in response to market events and to improve the stability of the financial system. Additional revisions to this framework or new capital adequacy rules applicable to TradeStation may be proposed and ultimately adopted, which could further increase TradeStation’s minimum capital requirements in the future, have an adverse effect on its business, operating results and financial condition, or result in the removal of permissions to operate, fines or public censure. Even if regulators do not change existing regulations or adopt new ones, TradeStation’s minimum capital requirements will generally increase in proportion to the size of its business conducted by its regulated subsidiaries. As a result, TradeStation will need to increase its regulatory capital, including its excess net capital (meaning the amount in excess of the minimum regulatory capital, which both regulators and certain customers look at to evaluate the overall health of TradeStation’s business in the context of the size, scope and nature of its brokerage activities), in order to expand its operations, as

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currently planned, and increase its net trading income, and its inability to increase its capital on a cost-efficient basis could constrain its growth or expansion into new or related brokerage services. In addition, in many cases, TradeStation is not permitted to withdraw regulatory capital maintained by its subsidiaries without prior regulatory approval or notice, which could constrain its ability to allocate its capital resources quickly or most efficiently throughout its operations. In particular, these restrictions could adversely affect TradeStation’s ability to withdraw funds needed to satisfy ongoing operating expenses, debt service and other cash needs and could limit, among other key strategic decisions, any future decision by the TradeStation Board to declare dividends.

TradeStation’s compliance and risk management policies and procedures as a regulated financial services company may not be fully effective in identifying or mitigating noncompliance and risk exposure in the market environments or against all applicable types of risk, and TradeStation may be required to expend considerable time and cost to expand its compliance and risk infrastructure.

As a financial services company operating in the securities and futures industries, among others, TradeStation’s business exposes it to a number of heightened risks. TradeStation has devoted significant resources to develop and maintain its compliance and risk management policies and procedures and will continue to do so, but there can be no assurance these are sufficient, especially if TradeStation’s business rapidly grows and evolves. Evolving business and growth make it difficult to predict all of the risks and challenges TradeStation may encounter and may increase the risk that the ability of TradeStation’s policies and procedures to identify, monitor and manage compliance risks may not be fully effective in mitigating TradeStation’s exposure in all market environments or against all types of risk. Further, some controls are manual and are subject to inherent limitations and errors in oversight and other human errors and wrongdoing. This could cause TradeStation’s compliance and other risk management strategies to be ineffective. Other compliance and risk management methods depend upon the evaluation of information regarding markets, customers, catastrophe occurrence or other matters that are publicly available or otherwise accessible to TradeStation, which may not always be accurate, complete, up-to-date or properly or timely evaluated. Insurance and other traditional risk-shifting tools may be held by or available to TradeStation in order to manage certain exposures, but they are subject to terms, such as deductibles, coinsurance, limits and policy exclusions (often related to regulatory violations), as well as risk of counterparty denial of coverage, default or insolvency. Any failure to maintain effective compliance and other risk management strategies could have a material adverse effect on TradeStation’s business, financial condition and results of operations.

TradeStation is also exposed to heightened regulatory risk because its business is subject to extensive regulation and oversight in a variety of areas, and such regulations are subject to evolving interpretations and application and it can be difficult to predict how they may be applied to TradeStation’s business, particularly as TradeStation introduces new products and services and expands into new jurisdictions. Any perceived or actual breach of laws and regulations could negatively impact TradeStation’s business, financial condition or results of operations. It is also possible that these laws and regulations could be interpreted or applied in a manner that would prohibit, alter or impair its existing or planned products and services and TradeStation may be required to expend considerable time and cost to expand its compliance and risk infrastructure.

TradeStation’s exposure to credit risk with customers and counterparties could result in uncollectible unsecured debts and counterparty obligations and other potentially unrecoverable obligations owed to it.

TradeStation extends margin credit and leverage to its securities and futures customers which are collateralized by customer cash and assets under its custody. TradeStation also lends its customers’ securities, on a collateralized basis, in connection with its broker-dealer business. Extending margin or similar leverage and lending securities subjects TradeStation to risks inherent in extending credit, primarily when the collateral is insufficient to cover the customer’s or counterparty’s indebtedness and an unsecured, and often uncollectible, obligation to TradeStation is created. Sharp changes in market values of substantial amounts of securities in a short period of time and the failure by parties to the margin, leverage or other borrowing transactions to honor their commitments could have a material adverse effect on TradeStation’s business, financial condition and results of operations. Such changes could also materially adversely impact TradeStation’s capital. TradeStation has policies and procedures designed to manage credit risk, but it cannot guarantee that such policies and procedures will be effective in preventing TradeStation from incurring

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substantial unrecoverable losses resulting from defaults by customers and counterparties that are not, or turn out not to be, fully secured by appropriate collateral. These credit risks may be materially increased during, or as a result of, major business, economic, or market events, which may include major political or military conflicts, conditions or events, that may severely and suddenly impact market volatility, volumes and prices. See, also, “— Risks Related to TradeStation’s Business — TradeStation’s business and reputation may be harmed by changes in business, economic or political conditions, or by events such as global conflicts or pandemics, that impact financial markets, including systemic market events.”

Providing investment education tools could subject TradeStation to additional risks and costs, including reputational and litigation risks, and if such tools are construed to be investment advice or recommendations, TradeStation could face adverse regulatory enforcement actions and significant cost and disruption to its business.

TradeStation provides a variety of investment education and tools, market insights and financial news to its customers that it does not consider investment advice or to include investment recommendations, but it cannot guarantee that such services will not be construed as constituting investment advice or recommendations by customers or regulatory agencies. Risks associated with providing investment advice include, among others, those arising from how TradeStation discloses and addresses possible conflicts of interest, inadequate due diligence, inadequate disclosure, human error and fraud. New regulations, such as the SEC’s Regulation Best Interest (Rule 15I-1) under the Exchange Act and certain state broker-dealer regulations, impose heightened conduct standards and requirements if TradeStation is deemed to provide recommendations to retail investors. In addition, various states are considering potential regulations or have already adopted certain regulations that could impose additional standards of conduct or other obligations on TradeStation if it provides investment advice or recommendations to its customers. Furthermore, TradeStation could be subject to investigations by regulatory agencies if its services are construed as constituting investment advice or recommendations. To the extent that the services it provides are construed or alleged to constitute investment advice or recommendations and TradeStation fails, or has failed, to satisfy regulatory requirements, fails, or has failed, to know its customers and what is suitable to provide to them, improperly advises its customers, or if risks associated with advisory services otherwise materialize, TradeStation could be found liable for losses suffered by such customers, or could be subject to regulatory fines, penalties and other actions, such as business limitations, any of which could harm its reputation, business, financial condition and results of operations.

TradeStation’s peer-to-peer and similar social communities and forums, which it intends to expand, may subject it to additional risks and compliance obligations and costs, in particular in areas such as investment advice or recommendations, trade solicitation and market manipulation, each of which would require substantial ongoing monitoring and review, at potentially significant costs, to try to prevent or mitigate inappropriate conduct in those areas.

Applicable regulators have publicly expressed a focus on social communities and forums in TradeStation’s industry, and may disagree with the appropriateness of the activities in such communities and forums, initiate costly inquiries and investigations, issue adverse guidance or interpretations, or take detrimental enforcement actions.

Because of the social aspect of portions of TradeStation’s platform, in particular TradeStation’s educational tools, which it intends to expand, customers’ actions on TradeStation platform expose TradeStation to risks, some of which are similar to any other social media company, however, some present unique risks given TradeStation’s financial services offering. Statements made through social community platforms or environments TradeStation provides may be misleading or manipulative and could lead to abusive or disorderly trading and/or result in customers entering into transactions that are not suitable for them. TradeStation may also incur liability as a result of information received from third parties made available through its platform or hosted social communities or claims related to its products. Following significant retail investor activity trading in certain “meme stocks” in early 2021 (including, for example, with a view to causing a “short squeeze” in specific stocks), social trading has received regulatory interest and may receive increased regulatory scrutiny going forward. For example, FINRA is currently investigating TradeStation’s handling of customer communications around the REDDIT stock event in January 2021 that caused market volatility and disruptions surrounding GameStop (the “REDDIT Stock Event”). The House Committee on Financial Services conducted an investigation of the events surrounding the REDDIT

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Stock Event, and in its resulting report published in June 2022, recommended policy changes that would be aimed at allowing regulators to better understand any influx of retail traders, enhance supervision of retail facing “superbrokers” and strengthen capital and liquidity requirements and oversight. In addition, broader content-focused legislation regulating content on its platform may require TradeStation to change its products or business practices and may adversely affect its business, financial condition and results of operations. Furthermore, TradeStation may be negatively affected by the actions of customers that are deemed to be hostile or inappropriate to other customers or by the actions of customers acting under false or inauthentic identities or that attempt to manipulate trading prices. In such events, TradeStation could suffer from customer complaints, litigation and negative publicity or regulatory action. See, also, “— Risks Related to Regulation and Litigation — Public officials have signaled an increased focus on new or additional regulations that could impact TradeStation’s business and require TradeStation to make significant changes to its business model and practices, including with respect to social communities, PFOF, cryptocurrency lending, paying cryptocurrency interest on customer cryptocurrency account balances and custody of cryptocurrencies. Changes in these regulations, or interpretations thereof by regulators, failure to comply with these regulations, or proceedings and investigations related thereto, could harm its business, financial condition and results of operations.”

In addition, TradeStation’s interactive platform allows customers to be more vocal about any issues they experience with its products and services. Therefore, the social nature of portions of TradeStation’s platform or hosted social communities may encourage dissatisfied customers to share information about bad experiences on TradeStation’s platform or with TradeStation, which could result in increased customer complaints reportable to regulators (and the regulatory investigation or enforcement consequences thereof), damage to TradeStation’s reputation, and lower, no or negative account growth or retention. See also “— Risks Related to Regulation and Litigation — TradeStation is subject to legal proceedings and claims in the ordinary course of its business, which could cause it to incur significant legal expenses. An adverse resolution of any future legal proceedings or claims could result in a negative perception of TradeStation and have a material adverse effect on its business, financial condition and results of operations.”

Risks Related to TradeStation’s Cryptocurrency Products and Services

The market for cryptocurrency is fragmented, volatile and unpredictable, which may prevent customers from easily entering or liquidating their cryptocurrency positions and which may increase their losses or prevent them from realizing their gains, or may result in large losses over a short period of time.

The cryptocurrency markets are fragmented, volatile and unpredictable. As a result, the prices of cryptocurrencies are highly speculative and are subject to dramatic fluctuations. Several factors may affect volatility, future expectations and prices, including, but not limited to:

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Global cryptocurrency supply, including various alternative currencies which exist or may be developed, and global cryptocurrency demand, which can be influenced by the growth or decline of retail merchants’ and commercial businesses’ acceptance of cryptocurrencies as payment for goods and services;

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The security of online cryptocurrency exchanges and digital wallets that hold cryptocurrencies, and the perception about whether the use and holding of digital currencies is safe and secure;

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The underlying technology of a cryptocurrency may suddenly change such that the new version of the cryptocurrency is no longer compatible with existing versions or there is otherwise a permanent divergence of the cryptocurrency’s blockchain (a fork), which could adversely impact the value, functionality and other characteristics of the cryptocurrency;

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Changes in the rights, obligations, incentives or rewards for the various participants in a blockchain network;

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The maintenance and development of the software protocol of cryptocurrencies;

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Cryptocurrency exchanges’ deposit and withdrawal policies and practices, liquidity on such exchanges and interruptions in service from, or failures of, such exchanges;

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The value of stablecoins could be materially adversely affected if a large number of stablecoin holders seek to redeem or sell their stablecoin for cash, which could result from concerns over the stablecoin issuer’s solvency or other circumstances;

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In the case of stablecoins that maintain reserves to support their value, the value of the stablecoin could be materially adversely affected by events or circumstances that adversely affect the issuer of the stablecoin or that adversely affect the underlying assets held in reserve, such as volatility in the value of the underlying assets or incidents such as fraud or technology, security or other issues;

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In the case of stablecoins that seek price stability by using algorithmic formulas intended to control supply, the value of the stablecoin could be materially adversely affected by technological or other issues that make their algorithms or related mechanisms ineffective (for example, this happened recently to an algorithmic stablecoin, known as TerraUSD, when its value collapsed from its $1 peg to less than $0.20 in less than one week, and which, as of June 20, 2022, had a market value of less than ($0.01);

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Regulatory measures or restrictions that affect the use and value of cryptocurrencies;

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Competition for and among various cryptocurrencies that exist and market preferences and expectations with respect to adoption of individual digital assets;

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Actual or perceived manipulation of the markets for cryptocurrencies;

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Actual or perceived threats that cryptocurrencies and related activities such as mining have adverse effects on the environment or are tied to illegal activities;

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Social media posts and other public communications by high-profile individuals relating to specific cryptocurrencies, or listing or other business decisions by cryptocurrency companies relating to specific cryptocurrencies; and

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Expectations with respect to the rate of inflation in the economy, monetary policies of governments, trade restrictions and currency devaluations and revaluations.

There is no assurance that any of TradeStation’s supported cryptocurrency assets will maintain their value or that there will be meaningful levels of trading activities in such cryptocurrency assets. Changes in the prices or trading volume of cryptocurrencies (including stablecoins) caused by the factors described above or other factors may impact TradeStation’s regulatory net worth requirements as well as the demand for TradeStation’s services. In case of sudden, large price movements, some leveraged market participants may not be able to meet their obligations to TradeStation or other brokers who, in turn, may not be able to meet their obligations to their counterparties. This may prevent customers from easily liquidating their cryptocurrency positions, which may increase their losses or prevent them from realizing their gains, or may result in large losses over a short period of time.

TradeStation’s exposure to credit risk with counterparties could result in uncollectible counterparty obligations owed to it. Various factors could contribute to the loss in value of collateral for a loan in addition to market volatility.

TradeStation has loaned cryptocurrencies to institutional borrower counterparties for the purpose of generating interest revenue from such loans. The loans have included proprietary cryptocurrency assets owned by TradeStation, as well as cryptocurrency assets owned by customers. While TradeStation requires such borrowers to maintain collateral worth more than the value of the assets being loaned, TradeStation is subject to risks inherent in extending credit, especially during periods of volatile markets, including rapid declines or increases in the market value of the collateral or loaned assets, as a result of which the value of the collateral could fall below the amount of the loaned assets. Various factors could contribute to loss in value of collateral for a loan in addition to market volatility, including many of the other risks described under “— Risks Related to TradeStation’s Cryptocurrency Products and Services,” such as fraud, technology or security issues, regulatory measures or other factors. Sharp changes in values of substantial amounts of cryptocurrencies in a short period of time and the failure by parties to the borrowing transactions to honor their commitments, including timely increases of collateral and repayment when due, could have a material adverse effect on TradeStation’s business, financial condition and results of operations. While TradeStation

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discontinued all lending of cryptocurrencies as of June 30, 2022, proprietary loans in the aggregate principal amount of $18 million (all of which are USDC stablecoin and have fixed terms) remain outstanding after July 1, 2022 and will terminate upon their respective maturity dates, including one $13 million loan that matures August 26, 2022 and one $5 million loan that matures January 30, 2023, and TradeStation will continue to face, with respect to such loans, the risks described above until they have been fully repaid.

Cryptocurrency is believed by many to attract a disproportionately high, as compared to legal tender and other asset classes, number of bad actors who engage, or seek to engage, in cyber-attacks, fraud, theft, money laundering and other crimes or illegal or prohibited activities. Additionally, transactions in cryptocurrency may be irreversible and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable.

Cryptocurrency is believed by many to attract a disproportionately high, as compared to legal tender and other asset classes, number of bad actors who engage, or seek to engage, in cyber-attacks, fraud, theft, money-laundering and other crimes or illegal or prohibited activity. Also, security issues, bugs and software design weaknesses and errors have been identified with many cryptocurrencies, their underlying blockchain networks, or digital wallet, custody and other applications and systems used by cryptocurrency exchanges to store and transmit cryptocurrencies, some of which have been exploited by malicious actors. Since the inception of cryptocurrencies, numerous cryptocurrency platforms have been sued, investigated, shut down or fined due to fraud, manipulative practices, misuse of customer assets, hackers, disclosure deficiencies, business failure and security breaches. In many of these instances, customers of these platforms were not compensated or made whole for their losses. Negative perception and a lack of stability and standardized regulation of cryptocurrencies, and the closure or temporary shutdown of cryptocurrency platforms due to fraud, business failure, hackers or malware distributors, or government mandated regulation and associated losses suffered by customers, may reduce confidence in cryptocurrencies and result in greater volatility of the prices of assets, including significant depreciation in value. While TradeStation believes it takes reasonable steps to prevent or reduce the risk of these types of harmful events, TradeStation today uses third-party vendors to provide its cryptocurrency trading platform, certain core middle-office software technology to transmit and account for and manage, in part, customers’ orders, and for storage of customer cryptocurrency assets, and therefore is subject to design flaws, bugs, errors and security issues that may be present and which may be more difficult to detect and address. There can be no assurance, even if TradeStation were to develop and own its own cryptocurrency platform, middle office and custody systems (and TradeStation is in the process of migrating its front-end cryptocurrency platform service to TradeStation technology), that TradeStation’s cryptocurrency offering will not suffer or be harmed by system flaws, deficiencies, failures and security breaches. Any of these events could have a material adverse impact on TradeStation’s business, financial condition and results of operations.

Additionally, transactions in cryptocurrency may be irreversible and, accordingly, losses due to fraudulent or accidental transactions may be irrecoverable. Cryptocurrencies are controllable only by the possessor of both the unique public key and private key relating to the local or online digital wallet in which such cryptocurrency is held. While blockchain ledgers require a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and stored securely in order to prevent an unauthorized third party from accessing the assets held in such digital wallet. TradeStation holds all cryptocurrencies owned by it and its customers in custody in two types of digital wallets: (i) hot wallets, which are managed online by TradeStation Crypto and (ii) cold wallets, which are managed entirely offline on a computer stored in one or more secure data facilities by a third-party custodian. In general, the overwhelming majority of cryptocurrency assets on TradeStation’s platform are held in cold wallets, though some coins are held in hot wallets to support day-to-day operations. TradeStation has engaged BitGo Trust Company (provider of cold wallet services) and BitGo, Inc. (provider of hot wallet services) (collectively, “BitGo”) to provide wallet services. Cold wallets are fully managed by BitGo as a third-party custodian, subject to procedures requiring withdrawals to be approved by two authorized TradeStation Crypto personnel as described below. BitGo holds all private key material offline in purpose-built, Class III bank vaults in secure locations within the United States. As a custodian, BitGo maintains full control over private key material for TradeStation Crypto’s cold wallets. Access to request and approve withdrawal from cold wallets is highly restricted and requires approval by two authorized TradeStation Crypto personnel. All withdrawal requests are initiated by an authorized TradeStation Crypto employee through the BitGo cold wallet user interface. Transaction requests are further authenticated by BitGo through an identity and transaction verification video call. Withdrawal requests must then be reviewed by a second TradeStation Crypto employee before

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being processed. TradeStation Crypto’s implementation of BitGo’s hot wallet architecture includes multi-signature digital wallets where TradeStation Crypto controls the majority of the private keys required to sign transactions. Hot wallets also are structured to use preventative controls such as whitelisting and transaction limits. Changes to BitGo hot wallet policies are subject to video call authentication and approval by two authorized TradeStation Crypto personnel. TradeStation Crypto is able to transact with hot wallets independently of BitGo in the event of a disaster. Backup private key material is generated and held completely offline in redundant, geographically diverse secure facilities. Access to these secure facilities is limited to senior TradeStation Crypto management. No single TradeStation Crypto employee has the ability to access a backup key independently. The digital wallet processes and controls described above are subject to periodic audits by TradeStation’s internal audit department and independent third-party audit firms. To the extent any private keys are lost, destroyed, unable to be accessed by it or BitGo or otherwise compromised and no backup of such private key is accessible, TradeStation will be unable to access the assets held in the related hot or cold wallets. Further, cryptocurrency assets and blockchain technologies have been, and may in the future be, subject to security breaches, hacking, or other malicious activities. Any loss of private keys or other credentials relating to, or hack or other compromise of, digital wallets used to store the cryptocurrency assets of TradeStation’s customers could result in a substantial business disruption, adverse reputational impact, inability to compete with competitors and regulatory investigations, inquiries or actions. See also “— The nascent, novel and evolving nature of cryptocurrency creates greater risks when compared to other asset classes, which in turn raises the risk of harm to TradeStation’s customers and TradeStation, the creation of unrecoverable losses to TradeStation’s customers and TradeStation and negative regulatory and political actions. These risks may result in substantial claims and other actions being brought against TradeStation by customers, regulators and other authorities, which may result in large judgments, settlements, fines, cease-and-desist and similar orders or sanctions, which could limit TradeStation’s cryptocurrency business or eliminate parts of it, and which harm its brand, reputation, business, financial condition and results of operations.”

BitGo insures the assets of its customers for which BitGo holds all of the private keys (which for TradeStation are the cryptocurrency assets of TradeStation’s customers held in cold wallets), from loss up to $250 million. BitGo’s insurance covers losses across all of its customers’ wallets caused by third-party breaches, including copying or theft of private keys, insider theft or dishonest acts by BitGo’s employees or executives and natural disasters. TradeStation Crypto has supplemented BitGo’s coverage of assets held in cold wallets with $50 million of additional coverage (under BitGo’s policy) that is only applicable to TradeStation Crypto’s assets held by BitGo. These policies each have one-year terms, which will expire in April 2023. Such policies have termination provisions that allow either party to terminate the policies upon 30-days’ or 60-days’ written notice, depending on the specific policy, to the other party. With respect to hot wallets, TradeStation maintains separate insurance policies with aggregate coverage of up to $25 million. These policies each have one-year terms, which will expire in May 2023, and TradeStation plans to renew the policies on or before their expiration. Such policies have termination provisions that allow either party to terminate the policies upon 30-days’ notice to the other party, among other standard termination provisions. The policies also contain provisions excluding coverage for loss caused by any dishonest, fraudulent or malicious act of any employee of TradeStation, loss caused by any theft or any other fraudulent, dishonest or criminal act committed by a director of TradeStation, and loss caused by an employee where TradeStation knew the employee had undertaken previous dishonest, fraudulent or malicious acts, among other standard exclusions. TradeStation’s insurance coverage described above may not be adequate to cover all possible losses that TradeStation could suffer, and TradeStation’s insurance costs may increase, or coverage may be denied. Although TradeStation maintains various risk management and loss prevention programs, TradeStation’s insurance policies do not cover all possible types of losses and liabilities. There can be no assurance TradeStation’s insurance will be sufficient to cover the full extent of all losses or liabilities for which TradeStation is insured and may be significantly less than the expected or actual loss.

Cryptocurrency is not legal tender, is not backed by the U.S. government or most other governments, and customer balances are not covered by FDIC or SIPC protections. The value of a cryptocurrency may be derived in large part from the continued willingness of market participants to exchange legal tender for cryptocurrency, or a particular cryptocurrency for another, which, if such willingness diminishes or disappears, may result in permanent and total loss of value for that particular cryptocurrency.

Cryptocurrency is not legal tender, is not backed by the U.S. government or most other governments and customer balances are not covered by FDIC or SIPC protections. In addition, since TradeStation Crypto

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customers’ cryptocurrency purchase and sale transactions involve withdrawals from, and deposits to, their accounts with TradeStation Securities, the SIPC insurance coverage for such accounts may not apply to their cash held with TradeStation Securities if, or to the extent, such cash had been, or was permitted to be, used for the purchase or sale of cryptocurrencies. Federal, state and foreign governments may restrict the use and exchange of cryptocurrency, and regulation in the U.S. and in other countries is still developing. For example, in September 2021, China declared all financial transactions involving cryptocurrencies illegal and issued a nationwide ban on cryptocurrency mining. Additionally, the value of cryptocurrencies is based in large part on market adoption and the continued willingness of market participants to exchange legal tender for cryptocurrency, or a particular cryptocurrency for another, which, if such willingness diminishes or disappears, may result in permanent and total loss of value for that particular cryptocurrency. Cryptocurrencies have only recently become selectively accepted as a means of payment by retail and commercial outlets and use of cryptocurrencies by consumers to pay such retail and commercial outlets remains limited. Banks and other established financial institutions may refuse to process funds for cryptocurrency transaction, process wire transfers to or from cryptocurrency exchanges, cryptocurrency-related companies or service providers, or maintain accounts for persons or entities transacting in cryptocurrency. Any of these actions, events or decisions could limit TradeStation’s ability to operate or limit products that it can offer, reduce liquidity in the market and damage the public perception of cryptocurrencies generally, or any one cryptocurrency in particular, and their utility as a payment system, which could decrease the price of cryptocurrencies generally or individually. While TradeStation has observed a continuing positive trend in the total market capitalization of cryptocurrency assets, driven by increased adoption of cryptocurrency trading by both retail and institutional investors and corporations as well as continued growth of various non-investing use cases, historical trends are not indicative of future adoption, and it is possible that the adoption of cryptocurrencies may slow, take longer to develop or never be broadly adopted, which would negatively impact TradeStation’s business, financial condition and results of operations.

Furthermore, unlike securities or other traditional asset exchanges and financial services providers, cryptocurrency platforms are relatively new and, in some cases, unregulated or insufficiently regulated. Because of this, users may be less familiar with cryptocurrency platforms or may not fully understand the risks associated with them. Additionally, while many prominent cryptocurrency platforms provide the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance, many cryptocurrency platforms do not provide this information, which could result in users making uninformed investment decisions. As a result, the marketplace may lose confidence in cryptocurrency platforms. Further, any security weaknesses identified with a cryptocurrency, any actual or perceived improper trading in trading platforms, any other fraudulent or manipulative acts and practices, any unrecoverable loss of customer assets and any associated negative publicity, could adversely affect the value of cryptocurrencies and negatively affect the market perception of such cryptocurrencies and, by extension, cryptocurrency markets and platforms, including TradeStation’s platform.

The underlying technology of a cryptocurrency may suddenly change, such that the new version of the cryptocurrency is no longer compatible with existing versions or there is otherwise a permanent divergence of the cryptocurrency’s blockchain (often called a “fork”), which could materially adversely impact the value, functionality and other characteristics of the cryptocurrency.

Most blockchain protocols, including Bitcoin and Ethereum, are open-source. Any user can download the software, modify it and then propose that users and miners of Bitcoin, Ethereum or other blockchain protocols adopt the modification. When a modification is introduced and a substantial majority of miners consent to the modification, the change is implemented and the applicable blockchain protocol networks remain uninterrupted. However, if less than a substantial majority of users and miners consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “fork” or “split” of the impacted blockchain protocol network and respective blockchain with one prong running the pre-modified software and the other running the modified software. The effect of such a fork is the existence of two versions of the blockchain protocol network running simultaneously, but with each split network’s cryptocurrency lacking interchangeability.

Both Bitcoin and Ethereum protocols have been subject to “forks” recently that resulted in the creation of new networks, including, among others, Bitcoin Cash, Bitcoin SV, Ethereum Classic and Litecoin. Some

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of these forks have caused fragmentation among platforms as to the correct naming convention for forked cryptocurrencies. Due to the lack of a central registry or rulemaking body in the cryptocurrency market, no single entity has the ability to dictate the nomenclature of forked cryptocurrencies, causing disagreements and a lack of uniformity among platforms on the nomenclature of forked cryptocurrencies, and which results in further confusion to customers as to the nature of cryptocurrencies they hold on platforms. In addition, several of these forks were contentious and, as a result, participants in certain communities may harbor ill will towards other communities. As a result, certain community members may take actions that adversely impact the use, adoption and price of Bitcoin, Ethereum or any of their forked alternatives.

Furthermore, hard forks can lead to new security concerns. For instance, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which transactions from one network were rebroadcast on the other network to achieve “double-spending,” plagued platforms that traded Ethereum through at least October 2016, resulting in significant losses to some cryptocurrency platforms. Similar replay attacks occurred in connection with the Bitcoin Cash and Bitcoin SV network split in November 2018. Another possible result of a hard fork is an inherent decrease in the level of security due to the splitting of some mining power across networks, making it easier for a malicious actor to cause losses on that network.

A fork can also lead to a disruption of networks and information technology systems, cybersecurity attacks, replay attacks or security weaknesses, any of which can further lead to temporary or even permanent loss of customer cryptocurrencies. Such disruption and loss could expose TradeStation to liability, even in circumstances where TradeStation has no intention of supporting a cryptocurrency compromised by a fork.

Moreover, TradeStation may not wish to or be able to support a cryptocurrency resulting from the fork of a network which may cause its customers to lose confidence in it or reduce their engagement on its platform. In assessing whether TradeStation will support a cryptocurrency resulting from the fork of a network, among TradeStation’s top priorities is to safeguard customer’s assets. There are several considerations that TradeStation considers as part of a general cryptocurrency approval policy, including security or infrastructure concerns that may arise with the integration of any new cryptocurrency into the technical infrastructure that allows TradeStation to secure customer cryptocurrencies and to transact securely in corresponding blockchains, which may operate to limit TradeStation’s ability to support forks. In addition, TradeStation’s ability to deliver forked assets may depend on decisions of third-party liquidity sources, custodians used by TradeStation and other service providers, which are outside of its control.

Whether TradeStation is obligated to provide services for a new and previously unsupported cryptocurrency is a question of contract, as recognized in recent published rulings of various courts. While TradeStation’s customer account agreement does not require it to provide such support, it may in the future be subject to claims by its customers arguing that they are entitled to receive certain forked cryptocurrencies by virtue of cryptocurrencies that they hold with TradeStation. If any customers succeed on a claim that they are entitled to receive the benefits of a forked cryptocurrency that TradeStation does not or is unable to support, TradeStation may be required to pay significant damages, fines or other fees to compensate customers for their losses.

The nascent, novel and evolving nature of cryptocurrency creates greater risks when compared to other asset classes, which in turn raises the risk of harm to TradeStation’s customers and TradeStation, the creation of unrecoverable losses to TradeStation’s customers and TradeStation and negative regulatory and political actions. These risks may result in substantial claims and other actions being brought against TradeStation by customers, regulators and other authorities, which may result in large judgments, settlements, fines, cease-and-desist and similar orders or sanctions, which could limit TradeStation’s cryptocurrency business or eliminate parts of it, and which harm TradeStation’s brand, reputation, business, financial condition and results of operations.

For fiscal 2020, fiscal 2021 and fiscal 2022, less than 0.1%, 1.6% and 3.1% of TradeStation’s trading-related revenue, respectively, was attributed to its cryptocurrency brokerage accounts. As TradeStation’s cryptocurrency brokerage business continues to grow and TradeStation expands its cryptocurrency product and service offerings, so do the risks associated with failing to safeguard and handle its customers’ cryptocurrencies. TradeStation’s success and the success of its offerings requires significant public confidence in its ability to properly manage customers’ balances and handle large and growing transaction volumes and amounts of customer assets. Any failure by TradeStation to maintain the necessary controls or to handle customer assets appropriately and in compliance with applicable regulatory requirements could result in

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reputational harm, significant financial losses, lead customers to discontinue or reduce their use of TradeStation’s platform and result in significant penalties and fines or additional restrictions, which could harm TradeStation’s reputation, business, financial condition, results of operations and prospects.

Allowing customers to deposit and withdraw cryptocurrencies directly into and from TradeStation’s platform, which TradeStation does allow, could result in unrecoverable loss of customer assets. To deposit cryptocurrencies held by a customer onto TradeStation’s cryptocurrency digital wallet, a customer must “sign” a transaction that consists of the private key of the digital wallet from where the customer is transferring cryptocurrencies, the public key of a digital wallet that TradeStation controls and provides to the customer, and the broadcast of the deposit transaction onto the underlying blockchain network. Similarly, to withdraw cryptocurrencies from TradeStation’s cryptocurrency digital wallet, the customer must provide TradeStation with the key of the digital wallet that the cryptocurrencies are to be transferred to, and TradeStation is required to “sign” a transaction authorizing the transfer. A number of errors can occur in this process of depositing or withdrawing cryptocurrencies into or from TradeStation’s cryptocurrency digital wallets, such as typographical errors, mistakes or the failure to include the information required by the blockchain network. In addition, each digital wallet address is only compatible with the underlying blockchain network on which it is created. For instance, if Ethereum is sent to a Bitcoin digital wallet address, the customer’s cryptocurrencies will be permanently and irretrievably lost with no means of recovery. Such incidents could result in customer disputes, damage to TradeStation’s brand and reputation, legal claims against TradeStation and financial liabilities, any of which could materially adversely affect TradeStation’s business, financial condition and results of operations.

Additionally, allowing customers to deposit and withdraw cryptocurrencies into and from TradeStation’s platform could expose TradeStation to heightened risks related to potential violations of trade sanctions, including the U.S. Treasury Department Office of Foreign Asset Control (“OFAC”) regulations, and anti-money laundering and counter-terrorist financing laws. Such fraudulent transactions may be difficult or impossible for TradeStation to detect and void in certain circumstances. The use of TradeStation’s platform for illegal or improper purposes could subject TradeStation to claims, individual and class action lawsuits, and government and regulatory investigations, prosecutions, enforcement actions, inquiries or requests that could result in reputational harm, and any resulting liabilities, loss of transaction volume, or increased costs, could harm TradeStation’s business, financial condition and results of operations. See “— Risks Related to Regulation and Litigation — TradeStation is subject to governmental laws and requirements regarding economic and trade sanctions, anti-money laundering and counter-terror financing that could impair its ability to compete in international markets or subject it to criminal or civil liability if it violates them.”

Further, cryptocurrencies and blockchain technologies have been, and may in the future be, subject to security breaches, hacking or other malicious activities and TradeStation cannot provide assurance that any of its digital wallets will not be hacked or compromised such that cryptocurrencies are sent to one or more private addresses that it does not control, which could result in the loss of some or all of the cryptocurrencies that it holds in custody on behalf of customers. Any such losses may be significant, and TradeStation may not be able to obtain insurance coverage for some or all of those losses. TradeStation is required to safeguard customers’ assets using robust standards applicable to TradeStation’s digital wallet and storage systems, as well as TradeStation’s financial management systems related to such custodial functions, and TradeStation’s security technology is designed to prevent, detect and mitigate unauthorized access to TradeStation’s systems by internal or external threats. However, methods used to obtain unauthorized access, disable or degrade service or sabotage systems are dynamic and evolving and may be difficult to anticipate or detect for long periods of time. Security breaches, computer malware and computer hacking attacks have been a prevalent concern in relation to cryptocurrencies. The cryptocurrencies held in TradeStation’s systems may be an appealing target to hackers or malware distributors seeking to destroy, damage or steal TradeStation’s assets or TradeStation’s customers’ assets and will only become more appealing as TradeStation’s assets and TradeStation’s customers’ assets under custody grow. To the extent that TradeStation is unable to identify and mitigate or prevent new security threats or otherwise adapt to technological changes in the cryptocurrency industry, TradeStation’s customers’ cryptocurrencies may be subject to theft, loss, destruction or other attack. Any loss of private keys relating to, or hack or other compromise of, digital wallets used to store TradeStation’s customers’ cryptocurrencies could result in total loss of customers’ cryptocurrencies or adversely affect its customers’ ability to sell their assets. TradeStation’s insurance coverage does not cover all customers’ cryptocurrency balances, and cryptocurrencies TradeStation

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holds in custody are not protected by the SIPC or FDIC. In addition, since TradeStation Crypto customers’ cryptocurrency purchase and sale transactions involve withdrawals from, and deposits to, their accounts with TradeStation Securities, the SIPC insurance coverage for such accounts may not apply to their cash held with TradeStation Securities if, or to the extent, the cash had been, or was permitted to be, used for the purchase or sale of cryptocurrencies. Any such theft, loss, destruction or attack could result in substantial costs to TradeStation and require TradeStation to notify impacted individuals, and in some cases regulators, of a possible or actual incident, expose TradeStation to regulatory enforcement actions, including substantial fines, limit TradeStation’s ability to provide products and services, subject TradeStation to litigation, significant financial losses, damage its reputation and materially adversely affect its business, financial condition and results of operations.

Regulation of the cryptocurrency industry is incipient, fragmented and complex and will likely change substantially. TradeStation’s interpretations of any cryptocurrency regulation may be subject to challenge by the relevant regulators and TradeStation’s failure to comply with such regulation may negatively impact its ability to allow customers to buy, hold and sell cryptocurrencies with it in the future and may materially adversely affect its business, financial condition and results of operations.

TradeStation provides customers with the ability to buy, hold and sell a limited number of cryptocurrencies, such as Bitcoin, Ethereum and Litecoin. While both domestic and foreign regulators and governments are increasingly focused on the regulation of cryptocurrencies, there is currently no uniformly applicable legal or regulatory regime governing cryptocurrencies in the U.S. Rather, TradeStation’s business is subject to extensive laws, rules, regulations, policies, orders, determinations, directives, treaties and legal and regulatory interpretations and guidance in the markets in which it operates, including those governing financial services and banking, trust companies, securities, broker-dealers and alternative trading systems, commodities, money transmitters and money services businesses, credit, cryptocurrency asset custody, cross-border and domestic money and cryptocurrency asset transmission, consumer and commercial lending, usury, foreign currency exchange, privacy, data governance, data protection, cybersecurity, fraud detection, payment services (including payment processing and settlement services), consumer protection, escheatment, antitrust and competition, bankruptcy, tax, anti-bribery, economic and trade sanctions, anti-money laundering and counter-terrorist financing. Cryptocurrencies are regulated by both federal and state authorities in the U.S. depending on their nature and the context of their usage, and regulation of cryptocurrencies continues to evolve. Recent initiatives by U.S. lawmakers and regulators have increasingly focused on cryptocurrencies and their impact on the economy, retail investors and securities markets, and lawmakers have urged the SEC and the CFTC to implement a comprehensive regulatory regime for cryptocurrencies. For example, President Biden recently signed an Executive Order outlining a strategy to ensure the responsible development of digital assets, including cryptocurrencies. Among other things, the Executive Order calls for the U.S. Department of the Treasury to assess and develop policy recommendations to address the implications of the growing digital asset sector and changes in financial markets for consumers, investors, businesses and equitable economic growth; encourages the Financial Stability Oversight Council to identify and mitigate systemic financial risks posed by digital assets and to develop appropriate policy recommendations to address any regulatory gaps; directs coordinated action across all relevant U.S. government agencies to mitigate national security risks posed by the illicit use of digital assets and establish a framework for enhancing United States economic competitiveness in, and leveraging of, digital asset technologies; and directs the U.S. government to assess the technological infrastructure and capacity needs for a potential U.S. central bank digital currency. Additionally, various states within the U.S. have recently proposed, or are in the process of implementing, additional or enhanced licensing and other regulatory obligations on entities, such as TradeStation, that provide cryptocurrency trading capabilities to retail investors. Cryptocurrency market disruptions and resulting governmental interventions are unpredictable, and may make cryptocurrencies, or certain cryptocurrency business activities, unprofitable or illegal altogether. There is a substantial risk of inconsistent regulatory guidance among federal and state agencies and state governments which, along with potential accounting and tax issues or other requirements relating to cryptocurrencies, could impede TradeStation’s growth and operations.

Additionally, many of the legal and regulatory regimes to which TradeStation is subject were adopted prior to the advent of the internet, mobile technologies, cryptocurrency assets and blockchain, and related technologies. As a result, they do not contemplate or address new issues associated with cryptocurrencies and are subject to significant uncertainty. For example, the Financial Crimes Enforcement Network of the U.S.

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Department of the Treasury has issued guidance indicating that cryptocurrency exchanges and brokers must comply with the Funds Travel Rule and the Funds Transfer Rule (commonly referred to collectively as the “Travel Rule”) on financial service providers in the cryptoeconomy. Cryptocurrency businesses face significant obstacles in complying with the Travel Rule, as it requires them to collect and retain customer information that is not essential to completing a cryptocurrency transaction and which cannot be transmitted through the current blockchain technology. While TradeStation has joined a working group to propose a framework to apply the Travel Rule to cryptocurrencies, it may face substantial compliance costs to operationalize and comply with the Travel Rule and similar regulations, and may be further subject to administrative sanctions for technical violations or customer attrition if the customer experience suffers as a result.

Further, the complexity and evolving nature of TradeStation’s cryptocurrency platform and the significant uncertainty surrounding the regulation of cryptocurrencies, and the interpretation thereof, requires TradeStation to exercise its judgment as to whether certain laws, rules and regulations apply to it and, if so, how, and it is possible that governmental bodies and regulators may disagree with TradeStation’s conclusions. To the extent TradeStation has not complied with such laws, rules and regulations or regulators’ interpretation thereof, it could be subject to significant fines and expenses, revocation of licenses, limitations on its products and services, reputational harm and other regulatory consequences, each of which may be significant and could materially adversely affect TradeStation’s business, financial condition and results of operations. In addition to existing laws and regulations, various governmental and regulatory bodies, including legislative and executive bodies, in the U.S. and in other countries may adopt new laws and regulations, or new interpretations of existing laws and regulations may be issued by such bodies or the judiciary. For example, the SEC recently issued guidance that permits special-purpose broker-dealers to hold digital assets in custody for customers. However, no special-purpose broker-dealers have yet been approved as members of FINRA and therefore no broker-dealers are currently operating as such. This guidance, and any further expansion in the types of entities permitted to custody digital assets, could increase competition for TradeStation. Furthermore, if any of the cryptocurrencies that TradeStation Crypto transacts in or maintains custody of are deemed to be securities under the federal securities laws, TradeStation would likely be subject to additional regulation that would obligate it to register as a broker-dealer with respect to its role in facilitating transactions in such cryptocurrency and therefore make it subject to the requirements set forth in the SEC’s December 23, 2020 statement, which could require changes to TradeStation Crypto's custody policies and procedures that may result in significant costs and efforts for TradeStation. TradeStation Crypto could also be subject to SEC enforcement action against it with respect to its prior activities related to such cryptocurrency, which may result in injunctions, cease and desist orders, fines and penalties. Additionally, the U.S. government is considering adopting a regulatory regime specific to stablecoins, which could include a requirement for stablecoins to be custodied only with certain licensed financial institutions. This potential requirement could force TradeStation to seek a new custodial relationship for its stablecoin assets. Furthermore, if the U.S. government were to adopt a digital dollar, there could be increased risk that demand from customers to hold and trade USDC and from borrowers to borrow USDC would materially diminish. Any such new laws, regulations or interpretations may materially adversely impact the development of the cryptoeconomy as a whole and TradeStation’s legal and regulatory status in particular by changing how it operates its business, how its products and services are regulated, and what products or services TradeStation and its competitors can offer, requiring changes to TradeStation’s compliance and risk mitigation measures, imposing new licensing requirements, or imposing a total ban on certain cryptocurrency asset transactions, as has occurred in certain jurisdictions in the past. Any one of these events could have a material adverse effect on TradeStation’s business, financial condition, results of operations or prospects. See also, “— Risks Related to Regulation and Litigation — Public officials have signaled an increased focus on new or additional regulations that could impact TradeStation’s business and require TradeStation to make significant changes to its business model and practices, including with respect to social communities, PFOF, cryptocurrency lending, paying cryptocurrency interest on customer cryptocurrency account balances and custody of cryptocurrencies. Changes in these regulations, or interpretations thereof by regulators, failure to comply with these regulations, or proceedings and investigations related thereto, could harm its business, financial condition and results of operations.”

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TradeStation recently decided to cease its cryptocurrency lending and payment of interest on customers’ cryptocurrency assets and will therefore no longer generate revenue from these activities and may experience a loss of customers as a result, which could negatively affect its business. TradeStation could also be subject to fines or other regulatory actions as a result of previously conducting these activities.

Since mid-2020, TradeStation generated a portion of its revenue from cryptocurrency rehypothecation and lending. Rehypothecation generally is the practice whereby banks and brokers use, for their own purposes, assets that are owned by their clients that have been deposited or held in accounts with the banks/brokers. The SEC and certain state regulators have recently challenged or questioned, including directly with TradeStation, the legality or appropriateness of cryptocurrency exchanges or brokerage firms lending or rehypothecating customers’ cryptocurrency assets that are in their custody, in particular if interest is paid to customers on their cryptocurrency balances, even if the interest paid to customers is not directly correlated to the specific lending of a customer’s assets or the interest revenue derived by the exchange or brokerage firm from the lending of those assets. For example, a multi-state examination in August 2021 found that TradeStation Crypto was not in compliance with certain state laws of North Carolina and Washington that require TradeStation Crypto to always be in possession of the same type, or like kind, and amount of virtual currency assets that are owed to customers (because the lending of customer cryptocurrency assets is secured by collateral in the form of a different cryptocurrency or asset). Subsequently, North Carolina closed its exam findings because it determined that TradeStation Crypto’s loans are deemed permissible under that State’s laws to the extent that such loans are not more than 30 days past due and the collectability of such loans is not otherwise doubtful. However, these lending and rehypothecation practices may be prohibited or limited in Washington or in other states.

Additionally, the SEC and certain state securities regulators have inquired whether TradeStation Crypto accounts may be deemed to be securities by virtue of the account feature that allows TradeStation Crypto customers to earn cryptocurrency “interest” on their cryptocurrency balances with TradeStation Crypto. In a recent settlement order with the SEC, In the Matter of BlockFi Lending LLC (the “Respondent”), Administrative Proceeding File No. 3-20758, it was found that the Respondent heavily marketed and sold interest-bearing accounts as a separate product which provided for the lending by the Respondent’s customers of cryptocurrency assets in exchange for a promise to be paid interest with respect to such loans, and that such accounts therefore constitute a security under federal securities laws. In that settlement order, the SEC also concluded that the loans of customer cryptocurrency assets loaned to it that the Respondent made to counterparties are considered investment securities under the Investment Company Act and, as a result, the Respondent failed to register with the SEC as an investment company or meet an applicable exemption or exclusion from the definition of an investment company. TradeStation Crypto believes that the ancillary interest-earning feature it has provided in cryptocurrency brokerage accounts is materially different in character, marketing and operation than the interest account product discussed in that settlement order and is not a security under federal securities laws. However, the SEC and state regulators may not agree with TradeStation Crypto’s position on this matter.

Any federal or state regulatory actions challenging TradeStation Crypto’s payment of interest on cryptocurrency account balances could result in liability or reputational damage to TradeStation, or could adversely impact its business, financial condition or results of operations in other ways. If the SEC were to conclude that brokerage accounts offered by TradeStation Crypto are securities and/or that cryptocurrency loans made by TradeStation Crypto are investment securities, TradeStation Crypto could have to pay significant fines, or face censure or other regulatory consequences. Furthermore, ceasing to pay interest on customer cryptocurrency account balances could diminish the growth of TradeStation’s cryptocurrency account base or result in certain customers decreasing the amount of business they do with TradeStation or ceasing to do business with TradeStation altogether, which could have a material adverse effect on TradeStation’s prospects with respect to its cryptocurrency offering.

After carefully considering, in consultation with various of its advisors, the regulatory issues and the historical and anticipated benefits to TradeStation’s business of rehypothecating or lending customer and TradeStation cryptocurrency assets and paying customers interest on their cryptocurrency account balances, TradeStation decided to discontinue all such activities in their entirety effective June 30, 2022. The discontinuation of these activities could diminish the growth of TradeStation’s cryptocurrency account base or result in certain customers decreasing the amount of business they conduct with TradeStation, and may

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negatively affect TradeStation’s ability to compete with cryptocurrency exchanges and brokers that offer rehypothecation or lending of customer cryptocurrency assets or pay customers interest on their cryptocurrency account balances, which could negatively impact TradeStation’s business, financial condition and results of operations. See, “Risks Related to TradeStation’s Business — If TradeStation fails to retain existing customers, or fails to attract new customers in a cost-effective manner, who generate brokerage revenue (or fails to attract new customers in general), or if its customers decrease their use of its products and services, TradeStation’s account and revenue growth could be slower than it expects (and, in fact, in the second half of fiscal 2022 customer account growth was lower than expected), and its business may be materially harmed,” “Risks Related to TradeStation’s Business — TradeStation operates in highly competitive markets, and many of TradeStation’s competitors have greater resources than TradeStation does and may have products and services that may be more appealing than TradeStation’s to its current and potential customers,” and “ — TradeStation offers to customers, as compared to most of its competitors, very few cryptocurrencies to invest in and trade, and TradeStation has recently decided to discontinue rehypothecating on lending customer and TradeStation cryptocurrency assets and paying customers interest on their cryptocurrency account balances, which may put it at a competitive disadvantage that will negatively affect its ability to grow its cryptocurrency investor customer base and cryptocurrency brokerage revenue.”

Additionally, there can be no assurance that, notwithstanding its decision to cease such activities, TradeStation Crypto will not be subject to enforcement actions or similar negative consequences if applicable regulators decide to assert that its lending activities or its interest payment activities violated their rules or regulations or applicable laws. See, also “ — A particular cryptocurrency’s status as a “security” in any jurisdiction is subject to a high degree of uncertainty and if TradeStation is unable to properly characterize a cryptocurrency it may be subject to federal or state regulatory scrutiny, investigations, fines and other penalties, which may adversely affect TradeStation’s business, financial condition and results of operations.”

A particular cryptocurrency’s status as a “security” in any jurisdiction is subject to a high degree of uncertainty and if TradeStation is unable to properly characterize a cryptocurrency it may be subject to federal or state regulatory scrutiny, investigations, fines and other penalties, which may adversely affect TradeStation’s business, financial condition and results of operations.

The SEC and its staff have taken the position that certain cryptocurrencies fall within the definition of a “security” under the U.S. federal securities laws but that the application of the securities laws to cryptocurrencies may not be warranted in every instance. The legal test for determining whether any given cryptocurrency is a security is a highly complex, fact-driven analysis that has and will continue to evolve over time, and the outcome is difficult to predict. The SEC staff has indicated that the determination of whether or not a cryptocurrency is a security depends on the characteristics and use of that particular asset, but the SEC generally does not provide advance guidance or confirmation on the status of any particular cryptocurrency as a security, and it is difficult to predict the direction or timing of any continuing evolution of the SEC’s views in this area. It is also possible that a change in the governing administration or the appointment of new SEC commissioners could substantially impact the views of the SEC and its staff. Prior public statements issued by senior officials at the SEC indicate that the SEC does not intend to take the position that Bitcoin or Ether (commonly called Ethereum) are securities in their current form. Bitcoin and Ethereum are the only cryptocurrencies as to which senior officials at the SEC have publicly expressed such a view. Nevertheless, such statements are not official policy statements by the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court and cannot be generalized to any cryptocurrency. Moreover, public statements made by the Chairman of the SEC in August 2021 suggest that he and the SEC staff believe that many cryptocurrencies are securities and cryptocurrency market participants should be subject to the full range of the federal securities laws. As a result, with respect to all cryptocurrencies, including Bitcoin and Ethereum, there is currently no certainty under the applicable legal test that such assets are not securities, notwithstanding the conclusions that TradeStation may draw based on its risk-based assessment regarding the likelihood that a particular cryptocurrency could be deemed a “security” under applicable laws. Similarly, though the SEC’s Strategic Hub for Innovation and Financial Technology published a framework for analyzing whether any given cryptocurrency is a security in April 2019, this framework is also not a rule, regulation or statement of the SEC and is not binding on the SEC.

The classification of a cryptocurrency as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading and clearing of such assets. For example,

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a cryptocurrency that is a security in the U.S. may generally only be offered or sold in the U.S. pursuant to a registration statement filed with the SEC or in an offering that qualifies for an exemption from registration. Persons that effect transactions in cryptocurrencies that are securities in the U.S. may be subject to registration with the SEC as a “broker” or “dealer.” Platforms that bring together purchasers and sellers to trade cryptocurrencies that are securities in the U.S. are generally subject to registration as national securities exchanges, or must qualify for an exemption, such as by being operated by a registered broker-dealer as an alternative trading system, in compliance with rules for alternative trading systems. Persons facilitating clearing and settlement of securities may be subject to registration with the SEC as a clearing agency. Foreign jurisdictions may have similar licensing, registration and qualification requirements.

TradeStation Crypto has policies and procedures to analyze whether a cryptocurrency that it permits to be traded on its platform could be deemed to be a “security” under applicable laws. See “TradeStation’s Business — TradeStation Crypto-Coin Evaluation Process.” In the event that it determines a listed cryptocurrency could be deemed a security or that the continued listing of a cryptocurrency presents risk to it or its customers, TradeStation Crypto will take action to discontinue the trading of such cryptocurrency. For example, in December 2020, the SEC filed legal action against Ripple Labs, Inc. (“Ripple”) and two of its executives, alleging that Ripple engaged in an unregistered ongoing digital asset securities offering of XRP coin beginning in 2013. Following the filing of that legal action, TradeStation, consistent with market practice in the industry, suspended all deposit making and all trading ability in XRP at least until such time as the allegations against Ripple are settled, and has acted only as a custodian of customers’ XRP assets, providing its customers solely the ability to withdraw such assets. Although TradeStation Crypto’s policies and procedures are intended to enable it to make risk-based assessments of whether a particular cryptocurrency should not be deemed to be a security under applicable laws, including federal securities laws, TradeStation Crypto’s assessments are not binding legal determinations as to whether a particular digital asset is a security under such laws. Accordingly, regardless of TradeStation Crypto’s conclusions, it could be subject to legal or regulatory action in the event the SEC, a foreign regulatory authority or a court were to determine that a cryptocurrency currently offered, sold or traded on the TradeStation cryptocurrency platform is a “security” under applicable laws. This could include TradeStation Crypto being subject to judicial or administrative sanctions for failing to offer or sell a cryptocurrency in compliance with the registration requirements, or for acting as a broker, dealer or national securities exchange without appropriate registration, as TradeStation Crypto is not a licensed broker-dealer. Such an action could result in injunctions and cease and desist orders, as well as civil monetary penalties, fines or disgorgement, criminal liability or reputational harm and could require TradeStation Crypto to become registered as a securities broker-dealer. Customers that traded such supported cryptocurrency and suffered trading losses could also seek to rescind a transaction that TradeStation Crypto facilitated on the basis that it was conducted in violation of applicable law, which could subject TradeStation Crypto to significant liability.

TradeStation Crypto only permits trading on its platform of those cryptocurrencies for which it determines there are reasonably strong arguments to conclude that the cryptocurrency is not a regulated security, which includes five cryptocurrencies added to its offering in June 2022 and up to three more cryptocurrencies TradeStation Crypto is in the process of adding to its offering later in the summer of 2022. See “TradeStation’s Business — TradeStation Crypto.” TradeStation Crypto believes that its process reflects a comprehensive and rigorous analysis and is reasonably designed to facilitate consistent application of available legal guidance to cryptocurrencies to facilitate informed risk-based business judgment. However, the application of securities laws to the specific facts and circumstances of cryptocurrencies is complex and subject to differing interpretations and change, and a determination made by TradeStation Crypto (as to both the cryptocurrencies it currently offers and the up-to-eight additional ones it plans to offer beginning in the summer of 2022) does not guarantee any conclusion under the U.S. federal securities laws. Being required to cease facilitating transactions in the supported cryptocurrency, in addition to the potential regulatory enforcement consequences, may be unpopular with customers and may reduce TradeStation Crypto’s ability to attract and retain customers. In addition, some of TradeStation Crypto’s larger competitors offer their customers up to 100 or more cryptocurrencies. TradeStation Crypto’s more conservative approach to adding new cryptocurrencies to its offering, both as to the number and types of cryptocurrency assets it is comfortable adding and the pace at which such additions are made, may render TradeStation Crypto’s offering insufficiently competitive, and could negatively impact TradeStation’s business, financial condition and results of operations. In addition, to the extent that future regulatory actions or policies limit or restrict cryptocurrency usage, custody or trading, or the ability to convert cryptocurrencies to fiat

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currencies, the demand for cryptocurrency trading may be reduced, which could likewise have a material adverse effect on TradeStation’s business, financial condition and results of operations.

In addition to the SEC and its staff taking the position that certain cryptocurrencies meet the definition of a “security” under the federal securities laws, the CFTC and its staff have generally taken the position that cryptocurrencies, at least to the extent they are not a security, meet the definition of a “commodity” under the Commodity Exchange Act. The CFTC has enforcement authority to impose fines and other remedies for manipulative or fraudulent activity in the commodities markets generally. Furthermore, transactions in commodity interests, such as futures, options and swaps, are subject to more extensive regulatory oversight by the CFTC, including, but not limited to, licensing of entities engaged in or offering commodity interest transactions along with entities offering specific services related to commodity interests. Furthermore, any transaction in a commodity, including a cryptocurrency that meets the definition of a commodity, entered into with, or offered to, retail investors using leverage, margin or other similar financing arrangements (“retail commodity transaction”) is subject to the CFTC’s enhanced regulatory regime applicable to futures trading unless the transaction results in actual delivery within 28 days, which as a practical matter is difficult, if not impossible, for TradeStation Crypto to do. Therefore, because of the retail commodity transaction rule, TradeStation Crypto does not offer leverage, margin or similar financing arrangements, including the ability to sell short, to its cryptocurrency brokerage customers, and requires that all of their transactions on its platform are fully paid. Not providing margin or leverage to customers’ cryptocurrency accounts puts TradeStation at a competitive disadvantage against non-U.S. exchanges who do provide such margin or leverage, and may generally be an obstacle to the growth of its cryptocurrency brokerage business.

TradeStation offers to customers, as compared to most of its competitors, very few cryptocurrencies to invest in and trade, and TradeStation has recently decided to discontinue rehypothecating or lending customer and TradeStation cryptocurrency assets and paying customers interest on their cryptocurrency account balances, which may put it at a competitive disadvantage that will negatively affect its ability to grow its cryptocurrency investor customer base and cryptocurrency brokerage revenue.

Some of TradeStation’s competitors support up to 100 or more cryptocurrencies. TradeStation currently offers approximately ten cryptocurrencies (five of which were added to its offering in June 2022) and intends to add three more in the summer of 2022. While TradeStation may plan to add more cryptocurrencies to its offering in the future, its ability to do so, and the timing of how quickly it can add more, depend on a variety of factors, including ensuring that the cryptocurrency will be compatible with its platform, custody and other systems, that its liquidity providers will be able to adequately support trading of the cryptocurrency, and that there is not a reasonable possibility the cryptocurrency will be deemed a security by the SEC and/or state securities agencies. TradeStation’s risk-management decisions about what cryptocurrencies it will add, and how quickly they can be added, may negatively affect TradeStation’s ability to compete with cryptocurrency exchanges and brokers that offer and support a larger number of cryptocurrencies, which could negatively impact TradeStation’s business, financial condition and results of operations. See, “— A particular cryptocurrency’s status as a “security” in any jurisdiction is subject to a high degree of uncertainty and if TradeStation is unable to properly characterize a cryptocurrency it may be subject to federal or state regulatory scrutiny, investigations, fines and other penalties, which may adversely affect TradeStation’s business, financial condition and results of operations.”

In addition, after carefully considering, in consultation with various of its advisors, the regulatory issues and the historical and anticipated benefits to TradeStation’s business of rehypothecating or lending customer and TradeStation cryptocurrency assets and paying customers interest on their cryptocurrency account balances, TradeStation decided to discontinue all such activities effective June 30, 2022. This means with respect to loans of customer assets and payment of interest to customers, no such loans are outstanding nor interest accruing after June 30, 2022 and, with respect to proprietary loans of TradeStation cryptocurrency assets (all of which are USDC stablecoin and have fixed terms), that no further loans have been originated or renewed since May 2022 and the loans which remain outstanding after July 1, 2022 (in the aggregate principal amount of $18 million) will terminate upon their respective maturity dates, including one $13 million loan that matures August 26, 2022 and one $5 million loan that matures January 30, 2023. TradeStation’s decision to discontinue such lending and interest payment activities could diminish the growth of its cryptocurrency account base or result in certain customers decreasing the amount of business they

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conduct with TradeStation, and may negatively affect TradeStation’s ability to compete with cryptocurrency exchanges and brokers that offer rehypothecation or lending of customer cryptocurrency assets or pay customers interest on their cryptocurrency account balances, which could negatively impact TradeStation's business, financial condition and results of operations. See, “Risks Related to TradeStation’s Business — If TradeStation fails to retain existing customers, or fails to attract new customers in a cost-effective manner, who generate brokerage revenue (or fails to attract new customers in general), or if its customers decrease their use of its products and services, TradeStation’s account and revenue growth could be slower than it expects (and, in fact, in the second half of fiscal 2022 customer account growth was lower than expected), and its business may be materially harmed” and “Risks Related to TradeStation’s Business — TradeStation operates in highly competitive markets, and many of TradeStation’s competitors have greater resources than TradeStation does and may have products and services that may be more appealing than TradeStation’s to its current and potential customers.”

Any inability of TradeStation to maintain adequate relationships with licensors of its cryptocurrency brokerage technology, cryptocurrency custody providers or cryptocurrency liquidity providers, or other relevant vendors or service providers, could negatively impact TradeStation’s cryptocurrency brokerage operations.

TradeStation Crypto relies on a third-party licensor for its cryptocurrency brokerage technology, third-party custodians, third-party banks and third-party liquidity providers to provide cryptocurrency products and services to customers. TradeStation’s cryptocurrency brokerage services operate seven days a week, do not have a centralized clearinghouse, and the transactions in cryptocurrencies on its platform rely on direct daily settlements of executed customer trades with each of its third-party liquidity providers. In addition, TradeStation Crypto must maintain cash assets in its bank accounts sufficient to meet the working capital needs of its business, which includes deploying available working capital to facilitate cash settlements between it and each of its third-party liquidity providers, as well as maintaining the minimum net worth required by regulators. If any of the third parties relied on to conduct TradeStation Crypto’s cryptocurrency business has operational failures and cannot perform and facilitate routine cash and cryptocurrency settlement transactions, or if TradeStation Crypto fails to maintain cash assets in its bank accounts sufficient to meet the working capital needs of its business and necessary to complete routine cash settlements related to customer trading activity, TradeStation Crypto will be unable to support normal trading operations on its cryptocurrency trading platform and these disruptions could have a material adverse impact on TradeStation’s business, financial condition and results of operations. For example, in the case of the stablecoin USDC, through a relationship with Coinbase, TradeStation Crypto has the right to redeem the USDC held by it for U.S. dollars (whether for its own account or for its customers) on a one-to-one basis, and Circle Internet Financial, Inc. (the entity that holds U.S. dollar or equivalent reserves for each USDC) has the obligation to honor such redemption on behalf of Coinbase. Any failure by Circle Internet Financial, Inc. to honor such redemptions could harm TradeStation Crypto’s customers and have a material adverse impact on TradeStation’s business, financial condition and results of operations.

TradeStation may also be harmed by the loss of its banking or third-party liquidity provider relationships. As a result of the many regulations applicable to cryptocurrencies or the risks of cryptocurrency assets generally, many financial institutions have decided, and other financial institutions may in the future decide, to not provide bank accounts, or access to bank accounts or other financial services, to companies providing cryptocurrency products, including TradeStation Crypto and its liquidity providers. Consequently, if TradeStation Crypto or its liquidity providers cannot maintain sufficient relationships with the banks that provide these services, banking regulators restrict or prohibit banking of cryptocurrency businesses, or if these banks impose significant operational restrictions, it may be difficult for TradeStation to find alternative business relationships for its cryptocurrency business, which may result in a disruption of that business and could have a material adverse impact on TradeStation’s reputation, business, financial condition and results of operations.

Additionally, TradeStation may be materially adversely affected if it is unable to maintain relationships with the licensor of its cryptocurrency brokerage technology. See “— If TradeStation fails to comply with its obligations under license or technology service agreements with third parties that are critical to its business, or was to lose technology licenses/service agreements due to actions or other facts pertaining to the licensors/​service providers, and is unable to timely replace them on reasonable terms, TradeStation may be required to pay damages or lose rights and technology that are critical to its business.”

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Risks Related to Regulation and Litigation

The nature of TradeStation’s business, particularly as a self-clearing brokerage firm for equities, options and futures, requires it to be in compliance with numerous, complex and changing regulatory frameworks, rules and regulations imposed by numerous and distinct regulatory authorities and to maintain a significant regulatory financial and operations compliance infrastructure. Changes in these laws and regulations, failure to comply with these laws and regulations, and proceedings and investigations related thereto, could harm TradeStation’s business, financial condition and results of operations.

The nature of TradeStation’s business, particularly as a self-clearing brokerage firm for equities, options and futures, requires it to be in compliance with numerous, complex and changing regulatory frameworks, rules and regulations imposed by numerous and distinct regulatory authorities, and makes TradeStation subject to substantially more regulatory control and examination than introducing brokers which rely on others to perform execution or clearing functions, or both. Regulatory, including SRO, bodies to whose oversight TradeStation is subject include, principally, the SEC, FINRA, DTC, NSCC and OCC for its equities (including equity options) business, the CFTC, CME and NFA for its futures (including futures options) business, and various international regulators, including the U.K.’s Information Commissioner’s Office and the FCA. Similarly, U.S. state attorneys general and other state regulators, including state securities and financial services regulators, can bring legal actions on behalf of the citizens of their states to assure compliance with state laws. In addition, criminal authorities, such as the U.S. Department of Justice, may institute civil or criminal proceedings for violating applicable laws, rules or regulations.

The SEC, FINRA, CFTC, CME and SROs have stringent rules with respect to the maintenance of specific levels of net capital and clearinghouse deposits by securities broker-dealers and FCMs and several other financial requirements. TradeStation’s failure, as a self-clearing broker-dealer and FCM, to maintain the required net capital levels or to satisfy its cash deposit, collateral, custody, liquidity and settlement obligations as required under applicable laws and regulations and by applicable regulators and exchanges could result in immediate suspension of its securities and/or futures activities (in whole or in part), prevent it from executing customer trade orders, or result in suspension or expulsion by the SEC or FINRA, and/or the CFTC, NFA or CME, as well as restrict TradeStation’s ability to expand its existing business or to commence new businesses, and could ultimately lead to the liquidation of TradeStation’s broker-dealer/FCM and winding down of its broker-dealer/FCM business. See also “— Risks Related to TradeStation’s Equities, Options and Futures Brokerage Products and Services — If TradeStation does not maintain its capital levels, or does not satisfy its cash deposit, collateral, custody, liquidity and settlement obligations, as required under applicable laws and regulations and by applicable regulators, its equities, options and futures brokerage businesses may be restricted and TradeStation may be fined or subject to other disciplinary or corrective actions or even being liquidated or wound down.”

Additionally, failure to obtain, qualify for, maintain or comply with the authorizations, approvals, licenses, permits or the regulatory frameworks established in each of the jurisdictions in which TradeStation and its subsidiaries are regulated gives rise to a number of significant risks, including, but not limited to, the removal of permissions to operate, fines and public censure. Non-compliance with laws and regulations, for example with respect to financial services licensing, the marketing or offering of products or services to customers, and consumer protection legislation in the jurisdictions in which customers reside, could affect the enforceability of TradeStation’s contracts. If regulators conclude that TradeStation’s marketing or financial promotions are not fair or clear, or are misleading, for example with respect to zero commission services, or that its conduct, or the conduct of any of its numerous third-party marketing vendors or commercial relationships otherwise does not comply with applicable laws or regulations, TradeStation may be exposed to regulatory sanctions or required to alter its marketing strategies in a manner which may negatively impact the development of its business. TradeStation’s businesses are subject to a significant amount of federal and state regulatory and SRO oversight, including being required to obtain and maintain numerous federal and state registrations and licenses and SRO memberships. Disparate licensing, marketing, product and reporting obligations constitute a significant regulatory and operational burden, which may require that TradeStation modify its product offerings based upon the location of customers or the nature of the products and services being marketed. For example, in a collective or other unified or simultaneous manner, or in the same communication to customers and prospects, TradeStation markets, promotes and advertises under one brand — TradeStation — its equities, options, futures and cryptocurrency

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brokerage services, often together with market education or investment insights, and different regulatory requirements apply, or may apply, to each of these subjects and categories. Failure to maintain licenses or registrations in particular jurisdictions may require that TradeStation cease providing some or all products and services to customers located in that particular jurisdiction. TradeStation may also be subject to litigation, investigations, fines, disgorgement of income, sanctions, damages and additional penalties or restrictions that could significantly harm its business, financial condition and results of operations.

TradeStation’s businesses are also subject to laws, rules, regulations, policies, industry standards and contractual obligations regarding data privacy and security, and TradeStation may be subject to litigation, regulatory proceedings or other investigations regarding any actual or perceived non-compliance with such obligations. See “— Risks Related to Cybersecurity and Data Privacy — TradeStation is subject to stringent laws, rules, regulations, policies, industry standards and contractual obligations regarding data privacy and security and may be subject to additional related laws and regulations in jurisdictions into which it expands. Many of these laws and regulations are subject to change and reinterpretation and could result in claims, changes to its business practices, monetary penalties, increased cost of operations or other harm to its business.”

Regulatory investigations and settlements could cause TradeStation to incur additional expenses or change its business practices in a manner material and adverse to its business, and could significantly damage TradeStation’s reputation. In the past, when risks have materialized, TradeStation has paid fines and updated its products and services, supervisory procedures and disclosures, or modified access to such products and services, as required to comply with applicable regulations or enforcement actions.

TradeStation has in place compliance programs to deal with these dynamic regulatory obligations, though cannot guarantee that such compliance programs will be effective. TradeStation’s regulated subsidiaries are in frequent and continuous dialogues with a number of regulators on a number of issues relating to compliance with applicable regulations. While TradeStation continues to review and enhance its compliance programs, it may be the case that regulators continue to scrutinize TradeStation’s operations for compliance with applicable regulations and take issue with the manner in which it provides or markets, or has provided or marketed, its services and products. The result may be regulatory enforcement action, imposition of fines, changes to TradeStation’s business model or ceasing to do business in particular jurisdictions or in relation to particular products or services, which may have a material negative impact on the future growth of TradeStation’s business, financial condition and results of operations. Further, any future enhancements to TradeStation’s compliance programs may not prove effective and may not shield it from liability for historic breaches of applicable regulatory obligations.

Public officials have signaled an increased focus on new or additional regulations that could impact TradeStation’s business and require TradeStation to make significant changes to its business model and practices, including with respect to social communities, PFOF, cryptocurrency lending, paying cryptocurrency interest on customer cryptocurrency account balances and custody of cryptocurrencies. Changes in these regulations, or interpretations thereof by regulators, failure to comply with these regulations, or proceedings and investigations related thereto, could harm its business, financial condition and results of operations.

Various lawmakers, regulators and other public officials have recently made statements and signaled an increased focus on new or additional laws or regulations that, if acted upon, could impact TradeStation’s business. Over three days in the spring of 2021, the Committee on Financial Services of the U.S. House of Representatives held hearings on the REDDIT Stock Event at which various members of Congress expressed their concerns about various market practices, including PFOF and options trading. Gary Gensler, who became chair of the SEC in April 2021, was one of the witnesses at the third hearing, held on May 6, 2021, and in his testimony indicated that he had instructed the staff of the SEC to study, and in some cases make rulemaking recommendations to the SEC regarding, a variety of market issues and practices, including PFOF and whether broker-dealers are adequately disclosing their policies and procedures around potential trading restrictions, whether margin requirements and other payment requirements are sufficient, and whether broker-dealers have appropriate tools to manage their liquidity and risk. Chair Gensler also discussed the use of mobile app features such as rewards, bonuses, push notifications and other prompts. Chair Gensler suggested that such prompts could promote behavior that is not in the interest of the customer, such as excessive trading and risk-taking. Chair Gensler also advised that he had directed the SEC staff to consider whether expanded enforcement mechanisms are necessary. Additionally, on June 9, 2021, Chair Gensler

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remarked at a public conference that he had instructed the SEC staff to make recommendations for the SEC’s consideration on best execution, Regulation National Market System, PFOF (both on-exchange and off-exchange), minimum pricing increments and the use of the National Best Bid and Offer quotation (“NBBO”). The regulatory agenda published by the SEC on June 11, 2021 also identified that the SEC would be considering proposing rules in the next year to modernize equity market structure, including possible new rules on PFOF, best execution or amendments to Rule 605 (which requires uniform public disclosure of order execution information by all market centers), market concentration and certain other practices. On August 27, 2021, the SEC issued a request for information and public comment on matters related to the use of digital engagement practices by broker-dealers and investment advisers, including behavioral prompts, differential marketing, game-like features and other design elements or features designed to engage with retail investors on digital platforms (e.g., websites, portals and applications), as well as related analytical and technological tools and methods. In an August 2021 interview, Chair Gensler commented that a full ban on PFOF was “on the table.” In his September 2021 testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs, Chair Gensler described a number of ongoing projects he had instructed SEC staff to pursue related to market structure, including review of PFOF, best execution in the context of the NBBO system, and cryptocurrency asset markets and trading platforms. Chair Gensler made similar comments in his October 2021 testimony before the U.S. House Committee on Financial Services, including noting that the NBBO system might benefit from modernization and might no longer necessarily be an appropriate baseline from which to measure price improvement in the context of assessing best execution. Also in October 2021, the SEC staff released its report on the equity and equity option market structure conditions surrounding the REDDIT Stock Event, which concluded in part that the episode may “present an opportunity to reflect” on market structure issues such as PFOF, and other structures that affect TradeStation’s operations. The House Committee on Financial Services conducted an investigation of the events surrounding the REDDIT Stock Event, and in its resulting report published in June 2022, recommended policy changes that would be aimed at allowing regulators to better understand any influx of retail traders, enhance supervision of retail facing “superbrokers” and strengthen capital and liquidity requirements and oversight.

In addition, on March 18, 2021, FINRA issued a regulatory notice reminding member firms of their obligations with respect to maintaining margin requirements, customer order handling and effectively managing liquidity, with a particular focus on best execution practices and the need for member firms to make “meaningful disclosures” to inform customers of a firm’s order handling procedures during extreme market conditions. Further, on June 23, 2021, FINRA issued a regulatory notice reminding member firms of the requirement that customer order flow be directed to markets providing the “most beneficial terms for their customers” and indicated that member firms may not negotiate the terms of order routing arrangements in a manner that reduces price improvement opportunities that would otherwise be available to those customers in the absence of PFOF. The impact that this notice may have on the ability of market participants to enter into PFOF arrangements, if any, has not been determined. For more information about the potential impact of legal and regulatory changes, including changes to regulation of PFOF, see “— The nature of TradeStation’s business, particularly as a self-clearing brokerage firm for equities, options and futures, requires it to be in compliance with numerous, complex and changing regulatory frameworks, rules and regulations imposed by numerous and distinct regulatory authorities and to maintain a significant regulatory financial and operations compliance infrastructure. Changes in these laws and regulations, failure to comply with these laws and regulations, and proceedings and investigations related thereto, could harm TradeStation’s business, financial condition and results of operations.”

Regarding cryptocurrency lending and paying cryptocurrency interest on customer cryptocurrency account balances, these practices are being challenged, including directly with TradeStation (which engages in both activities), by several state regulators (cryptocurrency lending) and the SEC and several state regulators (paying cryptocurrency interest), and these challenges could result in censures, fines, penalties and orders or settlements to limit, restrict or discontinue these business practices, which could affect TradeStation’s ability to compete successfully with cryptocurrency exchanges or brokerages not subject, or as exposed, to U.S. federal and state jurisdiction and which could have an adverse impact on TradeStation’s results of operations and its ability to grow its cryptocurrency account base. After carefully considering, in consultation with various of its advisors, the regulatory issues and the historical and anticipated benefits to TradeStation’s business of rehypothecating or lending customer and TradeStation cryptocurrency assets and paying customers interest on their cryptocurrency account balances, TradeStation decided to discontinue both

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activities in their entirety effective June 30, 2022. There can be no assurance that, notwithstanding its decision to cease such activities, TradeStation Crypto will not be subject to enforcement actions or similar negative consequences if applicable regulators decide to assert that its lending activities or its interest payment activities violated their rules or regulations or applicable laws. See, also, “— Risks Related to TradeStation’s Cryptocurrency Products and Services — TradeStation recently decided to cease its cryptocurrency lending and payment of interest on customers’ cryptocurrency assets and will therefore no longer generate revenue from these activities and may experience a loss of customers as a result, which could negatively affect its business. TradeStation could also be subject to fines or other regulatory actions as a result of previously conducting these activities.”

In addition, on December 23, 2020, the SEC issued a statement regarding the custody of cryptocurrencies that are “securities” by broker-dealers. The statement sets forth the SEC’s position that, until December 23, 2025, a broker-dealer will not be subject to an SEC enforcement action on the basis that the broker-dealer has obtained and maintained physical possession or control of customer fully paid and excess margin cryptocurrencies that are securities; provided that all of the conditions set forth in that statement are satisfied. These conditions include, among other things, that the broker-dealer limits its business to cryptocurrencies that are securities, maintains exclusive control over those cryptocurrencies that it holds in custody, establishes and implements policies and procedures reasonably designed to mitigate the risks associated with conducting a business in cryptocurrencies that are securities and provides customers with certain disclosures regarding the risks of engaging in transactions involving cryptocurrencies that are securities. Notwithstanding that TradeStation has concluded that none of the cryptocurrencies offered on the TradeStation Crypto platform are securities, it remains an open question as to how a broker-dealer would maintain custody of, rehypothecate or lend customer digital assets in compliance with Rule 15c3-3 under the Exchange Act and within the scope of the SEC’s December 23, 2020 guidance, and no special-purpose broker-dealers have yet been approved as members of FINRA, and therefore no broker-dealers are currently operating as such. If any of the cryptocurrencies that TradeStation Crypto transacts in or maintains custody of are deemed to be securities under the federal securities laws, TradeStation would likely be subject to additional regulation that would obligate it to register as a broker-dealer with respect to its role in facilitating transactions in such cryptocurrency and therefore make it subject to the requirements set forth in the SEC’s December 23, 2020 statement regarding the custody of cryptocurrencies that are “securities” by broker-dealers. Such determination could require changes to TradeStation Crypto's custody policies and procedures that may result in significant costs and efforts for TradeStation. TradeStation Crypto could also be subject to SEC enforcement action against it with respect to its prior activities related to such cryptocurrency, which may result in injunctions, cease and desist orders, fines and penalties.

To the extent that the SEC, FINRA, CFTC or other regulatory authorities or federal or state legislative bodies adopt additional regulations, legislation or interpretation in respect of any of these areas or relating to any other aspect of TradeStation’s business, TradeStation could face a heightened risk of potential regulatory violations and could be required to make significant changes to its business model and practices, which changes may not be successful and could lead to loss of customers and revenue, and regulatory censure or fines, among other material adverse impacts. Any of these outcomes could have a material adverse effect on TradeStation’s business, financial condition, results of operations and prospects.

TradeStation is subject to legal and regulatory investigations, proceedings and claims in the ordinary course of its business, which could cause it to incur significant legal expenses, damages and fines. An adverse resolution of any future legal proceedings or claims could result in a negative perception of TradeStation and have a material adverse effect on its business, financial condition and results of operations.

TradeStation is subject to legal and regulatory investigations, proceedings and claims in the ordinary course of its business, which could cause it to incur significant legal expenses and may result in litigation or enforcement. Such proceedings could also have collateral consequences, in addition to legal expenses, damages and fines, as discussed below. The volume of claims and the amount of damages and fines claimed in litigation and regulatory proceedings against financial services firms has been increasing and may continue to increase. The amounts involved in the trades TradeStation executes, together with rapid price movements in certain assets, can result in potentially large damage claims in any litigation resulting from such trades. The social networking aspect of portions of TradeStation’s platform and social forums or communities enables customers to communicate with each other regarding their trades and trading ideas

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and strategies, which could lead to amplification of complaints or of collusion between customers or other improper activities, such as market manipulation. Also, if many customers lose money, they may share this fact on TradeStation’s platform and other social networks, which could result in increased regulatory scrutiny. Dissatisfied customers, regulators or self-regulatory organizations may make claims against TradeStation regarding the quality of trade execution, improperly settled trades, mismanagement or even fraud, and these claims may increase if and as TradeStation’s business continues to expand. This increased scrutiny may be costly and time-consuming and may divert company resources from other business priorities.

Even if TradeStation prevails in litigation or enforcement proceedings against it, it could incur significant legal expenses and need to devote significant management time handling such claims, even those without merit. Moreover, because even claims without merit can damage TradeStation’s reputation or raise concerns among its customers, TradeStation may feel compelled to settle claims at significant cost. The initiation of any claim, proceeding or investigation against TradeStation, or an adverse resolution of any such matter, could have a material adverse effect on its reputation, business, financial condition and results of operations.

TradeStation is subject to ongoing examinations, oversight and reviews by U.S. federal and state regulators which have jurisdiction over large parts of its business, as well as by national securities associations, clearing organizations and exchanges (for exchanges, both in an SRO or similar rule compliance capacity and as contractual providers of market data for TradeStation’s use and distribution to its customers), and foreign financial service regulators, including the FCA, each of which have broad discretion to audit and examine TradeStation’s business. For example, TradeStation is currently subject to, among other exams, investigations or enforcement actions, an ongoing enforcement action by FINRA related to its anti-money laundering practices regarding the detection and reporting of suspicious trading activity and an ongoing investigation by the SEC related to compliance with Regulation S-ID. TradeStation has also received ongoing inquiries from SEC and state regulators with respect to its cryptocurrency lending and cryptocurrency interest payment practices. After carefully considering, in consultation with various of its advisors, the regulatory issues and the historical and anticipated benefits to TradeStation’s business of rehypothecating or lending customer and TradeStation cryptocurrency assets and paying customers interest on their cryptocurrency account balances, TradeStation decided to discontinue all such activities in their entirety effective June 30, 2022. There can be no assurance that, notwithstanding its decision to cease such activities, TradeStation Crypto will not be subject to enforcement actions or similar negative consequences if applicable regulators decide to assert that its lending activities or its interest payment activities violated their rules or regulations or applicable laws. See “Risk Factors — Risks Related to TradeStation’s Cryptocurrency Products and Services — TradeStation recently decided to cease its cryptocurrency lending and payment of interest on customers’ cryptocurrency assets and will therefore no longer generate revenue from these activities and may experience a loss of customers as a result, which could negatively affect its business. TradeStation could also be subject to fines or other regulatory actions as a result of previously conducting these activities.”

In addition, in March 2021, TradeStation paid an $850,000 fine to settle a FINRA enforcement action involving its best execution and PFOF practices. In connection with the settlement, TradeStation entered into an Acceptance, Waiver and Consent Letter with FINRA in which it consented, without admitting or denying the findings, to the entry of findings that, during the review period from January 2014 to February 2021 it “did not exercise reasonable diligence to ascertain whether the venues where it routed certain equity and equity option customer orders provided the best market for the subject securities as compared to the execution quality that was being provided at competing markets,” that it “did not review the execution quality it was receiving for certain order types” and that it “failed to establish and maintain a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with its best execution obligations under FINRA’s rules.” In 2016, during the review period, but prior to the FINRA settlement, TradeStation began its current practice of negotiating uniform PFOF arrangements with its market makers to better manage the potential conflict between PFOF and execution quality, and also enhanced its execution quality policies and procedures, including analysis of competing markets, and public disclosures. Such new policies and procedures cannot ensure against failure of, or future regulatory investigation or action with respect to, TradeStation’s best execution and PFOF practices.

In addition, the equities and futures exchanges which contractually license their market data to TradeStation for internal use and distribution to customers periodically conduct contractual audits

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regarding TradeStation’s monitoring and reporting of, and payment for, data usage, which typically cover multi-year periods and often result in claims that data license fees have been underpaid. In the past, some of these claimed underpayments, and the settlement of such claims, have been for millions of dollars.

As a result of findings from legal and regulatory investigations, proceedings and claims, regulators could take enforcement action which could result in remedial measures, damages, restitution obligations, fines, and requirements to engage approved consultants or monitors to oversee ordered compliance remediation or enhancement activities, as well as damage to its reputation with regulators, customers and in the industry generally, any of which could have a significant negative impact on TradeStation’s business. In particular, if TradeStation Securities is subject to a “statutory disqualification” as defined in Section 3(a)(39) of the Exchange Act and/or subject to any material disciplinary proceedings or orders, this could prohibit or greatly limit its ability to operate the business as it does today. Further, as a result of findings from these legal and regulatory investigations, proceedings and claims, regulators have imposed, are imposing, and may in the future impose, remedial measures requiring that certain actions be taken, including amending, updating or revising TradeStation’s compliance measures, limiting the kinds of customers to which it may provide services, or changing, terminating or delaying the introduction of new or existing products and services. TradeStation has received, and in the future will receive, examination reports citing potential and actual violations of rules and regulations and inadequacies in its compliance programs which require, or will require, TradeStation to enhance certain practices with respect to its compliance program, which may include matters relating to due diligence, monitoring, training, reporting and recordkeeping. Implementing appropriate measures to properly remediate these examination findings may require TradeStation to incur significant costs, and if it fails to properly remediate any of these examination findings, TradeStation could face civil litigation, significant fines, damage awards, forced removal of certain employees, including members of the executive team, barring of certain employees from participating in the business in whole or in part, revocation of existing licenses, limitations on existing and new products and services, reputational harm, negative impact to existing relationships with regulators, exposure to criminal liability or other material adverse consequences.

TradeStation is subject to governmental laws and requirements regarding economic and trade sanctions, anti-money laundering and counter-terror financing that could impair its ability to compete in international markets or subject it to criminal or civil liability if violated. Failure to comply with these laws and requirements could result in substantial fines, costly undertakings and regulatory actions that could limit TradeStation’s business activities. These risks may be elevated for brokerage firms for self-directed investors who open accounts and execute account transactions in an online environment, particularly for brokerage firms that offer cryptocurrency investment, trading, deposits and withdrawals.

TradeStation is required to comply with U.S. economic and trade sanctions administered by OFAC and has processes in place to comply with the OFAC regulations. As part of TradeStation’s customer onboarding process, in accordance with the Customer Identification Program rules, which is required by Section 326 of the U.S.A. Patriot Act, all potential customers are screened against the OFAC watchlists and continue to be screened daily against the OFAC watchlists. While TradeStation employs technology which includes features designed to block access to its services from sanctioned countries, its platform and services could potentially be illegitimately accessed from anywhere in the world. For example, on June 29, 2022, TradeStation made a voluntary self-disclosure to the U.S. Department of Treasury related to a nominal percentage of its customers’ compliance with OFAC’s comprehensive territorial-based sanctions. As a result, TradeStation could be subject to consequences, including public censure or monetary civil penalties. If TradeStation's platform is accessed from a sanctioned country or region or by a sanctioned entity or individual in violation of the trade and economic sanctions, with TradeStation’s knowledge or otherwise, TradeStation could be subject to enforcement actions and severe penalties.

TradeStation is also subject to various anti-money laundering and counter-terrorist financing laws and regulations around the world that prohibit, among other things, involvement in transferring the proceeds of criminal activities. In the U.S., most of TradeStation’s services are subject to anti-money laundering laws and regulations, including the BSA, and similar laws and regulations. The BSA is the primary U.S. anti-money laundering law and has been amended to include certain provisions of Title III of the U.S.A. Patriot Act to detect, deter and disrupt terrorist financing networks. Regulators in the U.S. and globally continue to increase their scrutiny of compliance with these obligations, which include substantial obligations on the part of broker-dealers and FCMs to conduct surveillance and monitoring to detect, prevent and interrupt

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market manipulation and other improper or illegal trading activities, and any violation or perceived violation by TradeStation or its customers could cause a material adverse effect on TradeStation’s business, financial condition and results of operations. Failures to comply with these laws and requirements could result in substantial fines, costly undertakings and regulatory actions that could limit TradeStation’s business activities. See “— TradeStation is subject to legal proceedings and claims in the ordinary course of its business, which could cause it to incur significant legal expenses. An adverse resolution of any future legal proceedings or claims could result in a negative perception of TradeStation and have a material adverse effect on its business, financial condition and results of operations.”

These risks may be elevated for brokerage firms for self-directed investors who open accounts and execute account transactions in an online environment, particularly for brokerage firms that offer cryptocurrency investment, trading, deposits and withdrawals, as cryptocurrencies are subject to heightened scrutiny, including under customer protection, anti-money laundering, counter terrorism financing and sanctions regulations. See “— Risks Related to TradeStation’s Cryptocurrency Products and Services — Regulation of the cryptocurrency industry is incipient, fragmented and complex and will likely change substantially. TradeStation’s interpretations of any cryptocurrency regulation may be subject to challenge by the relevant regulators and its failure to comply with such regulation may negatively impact its ability to allow customers to buy, hold and sell cryptocurrencies with it in the future and may significantly and adversely affect its business, financial condition and results of operations.”

TradeStation is subject to anti-corruption, anti-bribery and similar laws, and non-compliance with such laws can subject it to criminal or civil liability, substantial fines, costly undertakings, reputational damage and regulatory actions that could lead to significant fines or limitations on its business activities.

TradeStation is subject to U.S. domestic bribery laws and other U.S. and foreign anti-corruption laws. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees and their third-party intermediaries from authorizing, offering or providing, directly or indirectly, improper payments or benefits to recipients in the public sector. These laws also require that TradeStation keeps accurate books and records and maintains internal controls and compliance procedures designed to prevent any such actions. TradeStation has some business operations, including a U.K. and Costa Rica office, outside of the U.S., approximately 20% of its brokerage customers reside outside of the U.S., and it has had software licensing arrangements with brokerage firms in Asia (which are in the process of being wound down but have been in effect for several years), and is seeking to expand operations in Europe. TradeStation has engaged and may further engage with business entities and third-party intermediaries to market its services and to help obtain necessary permits, licenses and other regulatory approvals in foreign jurisdictions. For example, TradeStation’s U.K. subsidiary recently filed an application with the FCA to expand its broker license so that it may introduce cryptocurrency accounts to TradeStation Crypto, and TradeStation may decide to form a new entity to be domiciled in an E.U. country that would apply to be licensed as an introducing broker for some or all of the asset classes TradeStation offers to online investors. With respect to these existing and potential activities, TradeStation or its third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities or other government officials. TradeStation can be held liable for any corrupt or other illegal activities of these third-party intermediaries, and any by its employees, representatives, contractors, partners and agents, even if such activities are not authorized by TradeStation. The failure to comply with any such laws could subject TradeStation to criminal or civil liability, cause it significant reputational harm and have a material adverse effect on its business, financial condition and results of operations.

TradeStation cannot assure that all of its employees and agents will comply with its internal policies and applicable law, including anti-corruption, anti-bribery and similar laws. TradeStation may be ultimately held responsible for any such non-compliance. If and as TradeStation increases its international business, its compliance risks may increase.

Detecting, investigating and resolving actual or alleged violations of anti-corruption laws can require a significant diversion of time, resources and attention from senior management. In addition, noncompliance with anti-corruption or anti-bribery laws could subject TradeStation to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or

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criminal penalties, injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage and other collateral consequences. If any subpoenas are received or investigations are launched, or governmental or other sanctions are imposed, or if TradeStation does not prevail in any possible civil or criminal proceeding, TradeStation’s business, financial condition and results of operations could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.

TradeStation’s future efforts to sell shares or raise additional capital may be subject to delays and other limitations imposed by applications regulations.

TradeStation’s regulated subsidiaries are subject to certain regulations regarding changes in control. For example, FINRA Rule 1017 generally provides that FINRA approval must be obtained in connection with any transaction resulting in a change in control of a member firm. FINRA defines control as ownership of 25% or more of the firm’s equity by a single entity or person and would include a change in control of a parent company. Other rules and regulations may have lower ownership thresholds for determining whether a change in control has occurred. As a result of these rules and regulations, future efforts by TradeStation to sell shares or raise additional capital may be delayed or fail.

Risks Related to TradeStation’s Platform, Systems and Technology

TradeStation’s platform and systems have been, and may in the future be, subject to interruption, including extended outages, and instability due to operational and technological failures, whether internal or external, which could have a material adverse effect on its operations, brand reputation and ability to acquire and retain customers.

TradeStation relies on technology, including software, software systems, information technology software and systems, computer hardware, the internet, intranets and internet, web, mobile and blockchain services, to conduct substantially all of its business activity, both internal and external, including critical vendor services touching all aspects of its business (including self-clearing), API “B2B” relationships with third parties, and the conduct and management of transactions by TradeStation customers. All of TradeStation’s systems and operations, including its primary and disaster recovery data center operations, as well as those of the third parties on which it relies to conduct key functions, are vulnerable to disruptions from natural disasters, power and service outages, interruptions or losses, computer and telecommunications failures, software bugs, cybersecurity attacks, computer viruses, malware, distributed denial of service attacks, spam attacks, phishing or other social engineering, ransomware, security breaches, credential stuffing, technological failure, human error, terrorism, improper operation, unauthorized entry, data loss, intentional bad actions and other similar events. Certain disruptions have been experienced in the past and likely will be experienced in the future. TradeStation may be particularly vulnerable to technology failures because it relies significantly on its own proprietary software and systems for its business, including the front-end platform, order routing system, data collection and distribution systems, and other middle-office and back-end infrastructure, and because it self-clears trades for all of the major asset classes it offers to customers. This risk is heightened by TradeStation having assumed this large technology infrastructure and these self-clearing responsibilities being a relatively small company with limited resources, especially as compared to its larger self-clearing competitors which have far greater resources. If TradeStation fails to adequately support, maintain and upgrade its platform, middle-office and self-clearing technologies (whether owned by TradeStation or licensed or supported by third-party vendors of TradeStation) and operations, that could have a material adverse effect on TradeStation’s reputation, business, financial condition and results of operations.

In addition, surges in trading volume have in the past and may in the future cause TradeStation’s systems to operate at diminished speed or even fail, temporarily or for a prolonged period of time, which could affect its ability to process transactions and potentially result in some customers’ orders being executed at prices they did not anticipate, executed incorrectly, or not executed at all. This risk is heightened by TradeStation’s planned strategy, if successful, to achieve accelerated account growth and trading volume by its account base, together with accelerated hiring to add employee headcount, particularly in product and information technology, which must be timely and effectively on-boarded and trained to support such

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anticipated growth. Disruptions to, destruction of, improper access to, breach of, instability of, or failure to effectively maintain TradeStation’s information technology systems or external technology of third parties with whom TradeStation does business could result in customer attrition, costly litigation and regulatory inquiries, negative publicity and reputational harm, and may have a material adverse effect on TradeStation’s business, financial condition and results of operations. Frequent or persistent interruptions to TradeStation’s products and services could cause many existing customers to switch to TradeStation’s competitors or to otherwise avoid TradeStation’s products and services. A major and extended disruption could permanently or irreversibly severely damage TradeStation’s business.

While TradeStation has made, and continues to make, significant investments in the reliability, capacity and scalability of its product and service technology and supporting operations technology, TradeStation does not have fully redundant systems for all products and services and cannot assure that these investments will be successful or that TradeStation will be able to maintain, expand and upgrade its systems and infrastructure to meet future requirements and mitigate future risks on a timely basis. It may become increasingly difficult to maintain and improve the availability of TradeStation’s platform and related services, especially as its platform and product and service offerings become more complex, its customer base grows and when it experiences surges in trading volume. To the extent that TradeStation does not effectively address capacity constraints, upgrade its systems as needed, and continually develop or acquire technology and network architecture to accommodate actual and anticipated changes in technology, its reputation, business, financial condition and results of operations would likely be materially adversely affected.

TradeStation’s products and internal systems rely on software that is highly technical, and these systems may contain errors, latencies, bugs or vulnerabilities, and TradeStation may be unsuccessful in addressing or mitigating any such technical limitations or vulnerabilities in its systems in a timely fashion, or at all, which could have a material adverse effect on TradeStation’s operations, brand, reputation and ability to acquire and retain customers.

TradeStation’s products and internal systems rely on software, including software developed or maintained internally and by third parties, that is highly technical and complex. In addition, TradeStation’s platform and internal systems depend on the ability of such software to collect, store, retrieve, transmit, manage and otherwise process immense amounts of data. The software on which TradeStation relies may contain errors, bugs or vulnerabilities, and TradeStation’s systems may be subject to certain technical limitations that could compromise its ability to meet its objectives. Some errors, latencies, bugs or vulnerabilities inherently may be difficult to detect and may be discovered only after code has been released for external or internal use. Errors, latencies, bugs, vulnerabilities, design defects or technical limitations within the software on which TradeStation relies may lead to negative customer experiences, including the communication of inaccurate information to customers, compromised ability of TradeStation’s products to perform in a manner consistent with customer expectations, delayed product introductions, compromised ability to protect the data (including personal data) of customers and TradeStation’s intellectual property or an inability to provide some or all of TradeStation’s services. Such errors, latencies, bugs, vulnerabilities or defects could also be exploited by malicious actors and result in exposure of customers’ data to persons unauthorized to view such data, or otherwise result in a security breach or other security incident. TradeStation may need to expend significant financial and development resources to analyze, correct, eliminate or work around errors or defects or to address and eliminate vulnerabilities. TradeStation may fail to timely and effectively resolve any such errors, bugs, vulnerabilities or defects in the software on which it relies, and any associated degradations or interruptions of service could result in damage to its reputation, loss of customers, loss of revenue, regulatory or governmental inquiries, civil litigation or liability for damages, any of which could have a material adverse effect on TradeStation’s business, financial condition and results of operations. See, also, “TradeStation’s platform and systems have been, and may in the future be, subject to interruption, including extended outages, and instability due to operational and technological failures, whether internal or external, which could have a material adverse effect on its operations, brand reputation and ability to acquire and retain customers.”

TradeStation’s success depends in part upon effective interoperability with mobile operating systems, networks, technologies, products, hardware and standards that it does not control.

A significant portion of TradeStation’s customers’ activity on its platform occurs on mobile devices. There is no guarantee that popular mobile devices will continue to feature the TradeStation mobile

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application, or that mobile device customers will continue to use TradeStation products and services rather than those of its competitors. TradeStation is dependent on the interoperability of its application with popular mobile operating systems, networks, technologies, products, hardware and standards that it does not control, such as the Android and iOS operating systems. Any changes, bugs or technical issues in such systems or changes in TradeStation’s relationships with mobile operating system stores, providers, device manufacturers or mobile carriers, or in their terms of service or policies, that degrade the functionality of the TradeStation application, reduce or eliminate its ability to distribute applications, give preferential treatment to competitive products, limit TradeStation’s ability to target or measure the effectiveness of applications, or which impose fees or other charges related to delivery of the TradeStation application, could adversely affect customer usage of the TradeStation application. Further, TradeStation is subject to the standard policies and terms of service of these operating systems, as well as policies and terms of service of the various application stores that make the TradeStation application available to TradeStation’s customers and other third parties. These policies and terms of service govern the availability, promotion, distribution, content and operation generally of applications and experiences on such operating systems and stores. Each provider of these operating systems and stores has broad discretion to change and interpret its terms of service and policies with respect to the TradeStation application and those changes may be unfavorable to TradeStation and its customers’ use of such application. If TradeStation were to violate, or an operating system provider or application store believes that TradeStation has violated, its terms of service or policies, that operating system provider or application store could limit or discontinue TradeStation’s access to its operating system or store. In some cases these requirements may not be clear or TradeStation’s interpretation of the requirements may not align with the interpretation of the operating system provider or application store, which could lead to inconsistent enforcement of these terms of service or policies against TradeStation, and could also result in the operating system provider or application store limiting or discontinuing access to its operating system or store. Any such limitation or discontinuation of access to any third-party platform or application store could materially adversely affect TradeStation’s business, financial condition or results of operations.

Additionally, in order to deliver a high-quality mobile experience for customers, it is important that TradeStation’s products and services work well with a range of mobile technologies, products, systems, networks, hardware and standards that TradeStation does not control, and that TradeStation has good relationships with mobile operating system partners, device manufacturers and mobile carriers. TradeStation may not be successful in maintaining or developing relationships with key participants in the mobile ecosystem or in developing products that operate effectively with these technologies, products, systems, networks or standards. In the event that it is more difficult for TradeStation customers to access and use the TradeStation application, or if customers choose not to access or use the TradeStation application on their mobile devices or use mobile products that do not offer access to the TradeStation application, TradeStation’s customer growth and engagement could be harmed. In the event that customers are adversely affected by these actions, or if TradeStation’s relationships with such third parties deteriorate, TradeStation’s customer growth and engagement could be materially adversely affected and its business, financial condition and results of operations could be materially harmed.

TradeStation relies on third parties to perform certain key functions, including provision of market data, clearing and settlement, and supporting certain product offerings and cloud-based environments, and their failure to perform those functions could materially adversely affect TradeStation’s business, operations, brand reputation and ability to acquire and retain customers.

TradeStation relies on third parties that provide data center facilities, infrastructure, back-office systems, cryptocurrency platform, middle-office and custody software and services, customer relationship management (CRM), compliance and risk software and systems, website functionality and access, and other components and services, including databases and data center facilities and cloud computing, all of which are critical to TradeStation’s operations. For example, TradeStation relies on FIS’s Phase3 and GMI systems for clearance, settlement and trade accounting functions for its equities, options and futures business, Amazon Web Services and Microsoft Azure for cloud technology and services, a third-party software development company for its cryptocurrency platform and middle office and internet service providers, regulatory services providers, market makers, exchange systems, banking systems, co-location facilities, communications facilities and other facilities to run TradeStation’s platform and brokerage operations, facilitate trades by customers, and support or carry out certain regulatory obligations. In addition, external

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content providers provide TradeStation with financial information, market data, quotes and news for all asset classes TradeStation offers, and other fundamental data that TradeStation provides to its customers. These providers may experience operational, technological and security vulnerabilities, including security breaches, which may impact TradeStation’s business, and TradeStation’s ability to monitor their data security practices is limited. In addition, these third-party service providers may rely on subcontractors to provide services to TradeStation, and these subcontractors may face similar risks. Any interruption in these third-party services, or deterioration in the quality of their service or performance, could be materially disruptive to TradeStation’s business.

Any failure by, or security breach of third-party service providers or their subcontractors that result in an interruption in service, unauthorized access, misuse, loss or destruction of data or other similar adverse occurrence could interrupt TradeStation’s business, cause it to incur losses, result in decreased customer satisfaction and increase customer attrition, subject TradeStation to customer complaints, significant fines, litigation, disputes, claims, regulatory investigations or other inquiries and harm TradeStation’s reputation. See also “— TradeStation’s platform and systems have been, and may in the future be, subject to interruption, including extended outages, and instability due to operational and technological failures, whether internal or external, which could have a material adverse effect on its operations, brand reputation and ability to acquire and retain customers.” Through contractual provisions and third-party risk management processes, TradeStation takes steps to require that its providers, and their subcontractors, protect TradeStation and its customers’ data and information, including personal data. However, due to the size and complexity of TradeStation’s technology platform and services, the amount of data that it stores and the number of customers, employees and third-party service providers that have access to its personal data, TradeStation, its third-party service providers and their subcontractors may be vulnerable to a variety of intentional and inadvertent cybersecurity breaches and other security-related incidents and threats which could have a material adverse effect on TradeStation’s business, financial condition and results of operations. Any contractual protections TradeStation may have from its third-party service providers or related insurance coverage may not be sufficient to adequately protect TradeStation against such consequences, and TradeStation may be unable to enforce any such contractual protections or collect on such insurance.

In addition, there is no assurance that the third-party service providers or their subcontractors will be able to continue to provide these services to meet TradeStation’s current needs in an efficient, cost-effective manner or that they will be able to adequately expand their services to meet TradeStation’s needs in the future. An interruption in, or the cessation of service by, any of these third-party service providers or their subcontractors, coupled with the possible inability of TradeStation to make alternative arrangements in a smooth, cost-effective or timely manner, could have a material adverse effect on TradeStation’s business, financial condition and results of operations.

Further, if there were deficiencies in the oversight and control of any of these third-party relationships, regulators would likely hold TradeStation responsible for those deficiencies, which could have a material adverse effect on TradeStation’s business, reputation and results of operations.

Internet-related issues, which are largely outside of TradeStation’s control, including regulation, speed and quality of service, and the ability to conduct effective digital marketing, may negatively affect the quality of TradeStation’s services and its ability to grow and retain customer accounts.

TradeStation relies on digital marketing of various types, and plans to expand substantially its digital marketing as the main driver of its customer acquisition. If periods of decreased performance, outages or delays on the internet occur frequently or other critical issues concerning the internet are not resolved, overall internet usage or usage of TradeStation’s products could increase more slowly or decline, and TradeStation’s digital marketing efforts may be impaired, which could have a material adverse effect on TradeStation’s account growth strategy, business, financial condition and results of operations. Critical issues concerning the commercial use of the internet, such as regulation, ease of access, security, privacy, reliability, cost and quality of service, remain unresolved and may adversely impact the growth of internet use. If internet usage continues to increase rapidly, the internet infrastructure may not be able to support the demands placed on it by this growth, and its performance and reliability may decline. TradeStation’s ability to increase the speed with which it provide services to consumers, and ability to increase the scope and quality of such services, is, together with the success of TradeStation’s account growth strategy, limited by and dependent upon the

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speed and reliability of customers’ and customer prospects’ access to the internet, which is beyond TradeStation’s control. See also “— TradeStation is subject to stringent laws, rules, regulations, policies, industry standards and contractual obligations regarding data privacy and security and may be subject to additional related laws and regulations in jurisdictions into which it expands. Many of these laws and regulations are subject to change and reinterpretation and could result in claims, changes to TradeStation’s business practices, monetary penalties, increased cost of operations or other harm to its business financial condition and results of operations.”

Risks Related to Cybersecurity and Data Privacy

Because TradeStation collects, uses and otherwise processes customer information and other data, including personal data, its business could be materially and adversely affected by a cybersecurity breach, or by an actual or perceived failure by TradeStation or its third-party service providers to protect such information and data or to respect customers’ privacy, which could damage TradeStation’s reputation and brand, negatively affect its ability to retain customers and could materially or permanently damage its business, financial condition and results of operations.

An increasing number of organizations, including large technology companies, financial institutions and government institutions, have disclosed breaches of their information technology systems, some of which have involved sophisticated and highly-targeted attacks, including on portions of their websites, networks or infrastructure, or those of third parties who provide services to them. TradeStation’s systems and those of its customers and third-party service providers have been, and may in the future be, vulnerable to hardware and cybersecurity issues. TradeStation, like other financial technology organizations, is routinely subject to cybersecurity threats and its technologies, systems and networks have been and may in the future be subject to attempted cybersecurity attacks. Such issues are increasing in frequency and evolving in nature. TradeStation believes that the risk that it will be the target of such attacks will grow, perhaps significantly, if it is successful in rapidly growing its size, visibility and brand awareness in its industry, which is TradeStation’s plan.

Concerns about security increase when information is being transmitted, including personal data, electronically. Electronic transmissions can be subject to attack, interception, loss or corruption. In addition, computer viruses and malware can be distributed and spread rapidly over the internet and could infiltrate TradeStation’s systems or those of its customers or third-party service providers. Infiltration of TradeStation’s systems or those of its customers or third-party service providers could in the future lead to disruptions in systems, accidental or unauthorized access to or disclosure, loss, destruction, disablement or encryption of, or use or misuse of, or modification of, confidential, sensitive or otherwise protected information, including personal data, and the corruption of data.

Cybersecurity attacks and other malicious internet-based activity continue to increase and financial technology platform providers have been and are expected to continue to be targeted. In addition to traditional computer “hackers,” malicious code, employee theft or misuse and denial-of-service attacks, sophisticated nation-state and nation-state-supported actors now engage in attacks, including advanced persistent threat intrusions. Further, advances in computer capabilities, new discoveries in the field of cryptography, inadequate facility security or other developments may result in a compromise or breach of the technology TradeStation uses to protect customer data. As the breadth and complexity of the technologies TradeStation uses and the software and platforms it develops continue to grow, including as a result of the use of mobile devices, cloud services, open-source software, social media and the increased reliance on devices connected to the internet, the potential risk of security breaches and cybersecurity attacks also increases. Despite ongoing efforts to improve its ability to protect data from compromise, TradeStation may not be able to protect all of its data across its diverse systems. TradeStation’s efforts to improve security and protect data from compromise may also identify previously undiscovered instances of security breaches or other cyber incidents. TradeStation’s policies, employee training, including phishing-prevention training, procedures and technical safeguards may also be insufficient to prevent or detect improper access to confidential, proprietary or sensitive data, including personal data.

Additionally, due to the COVID-19 pandemic, there is an increased risk that TradeStation may experience cybersecurity-related incidents as a result of its employees, service providers and other third

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parties working remotely on or in less secure systems and environments. Controls employed by TradeStation’s information technology department and its customers and third-party service providers, including cloud vendors, could be inadequate to prevent or detect cybersecurity-related incidents in some of these environments or situations.

Information security risks for financial service providers are increasing, in part because of the use of the increasing internet, cloud-based servers and mobile technologies to conduct financial transactions and store information and, in the case of cryptocurrencies, the use of digital wallets. The operation of TradeStation’s platform involves the use, collection, storage, sharing, disclosure, transfer and other processing of customer information, including personal data, and security breaches and other security incidents could expose TradeStation to a risk of loss or exposure of this information, which could result in potential liability, investigations, regulatory fines, penalties for violation of applicable laws or regulations, litigation and remediation costs, as well as reputational harm. In addition, the highly-automated nature of TradeStation’s products and services, as well as the liquidity offered by its products and services, may make TradeStation and its customers a target for illegal or improper uses, including fraudulent transactions. Those committing fraud using stolen account numbers, or other deceptive or malicious practices, may be able to illegally obtain significant amounts of money from TradeStation’s businesses and customers. TradeStation’s obligations to its securities or digital asset account holders in the event of loss or fraud is highly dependent on the facts and circumstances of such loss or fraud, including whether the customer’s loss was caused by negligence or fraud on the part of such customer and the terms of the applicable customer account agreement as applied to the relevant facts and circumstances, as well as applicable regulations that may cover TradeStation’s and its customers’ respective risks and responsibilities concerning different types of account losses. Further, even if not obligated to do so, TradeStation may on a case-by-case basis, for customer relationship, reputational or other business reasons, decide to reimburse a customer who has suffered an account loss due to third-party fraud or theft.

While TradeStation takes efforts to protect its systems and data, including establishing internal processes and implementing technological measures designed to provide multiple layers of security, and contracts with third-party service providers to take similar steps, there can be no assurance that such safety and security measures, and those of the third-party service providers, will prevent damage to, or interruption or breach of, TradeStation’s or their information systems, data, including personal data, and operations. TradeStation may be required to expend significant resources to continue to modify or enhance its protective measures or to investigate and remediate any information security vulnerabilities. In addition, its remediation efforts may not be successful. Certain measures that could increase the security of TradeStation’s systems take significant time and resources to deploy broadly, and such measures may not be deployed in a timely manner or be effective against an attack. The inability to implement, maintain and upgrade adequate safeguards could have a material adverse impact on TradeStation’s business, financial condition and results of operations.

Moreover, there could be public announcements or media coverage regarding any cybersecurity-related incidents and any steps TradeStation takes to respond to or remediate such incidents. If securities analysts or investors perceive these announcements to be negative, it could, among other things, have a material adverse effect on the price of TradeStation common stock. Further, any publicized security problems affecting TradeStation’s businesses or those of third parties with whom it otherwise conducts business may discourage others, both customers and vendors, from doing business with TradeStation, which could have a material adverse effect on its business, financial condition and results of operations.

It is difficult or impossible to defend against every risk posed by changing technologies, as well as criminals’ intent to commit cyber-crime, and TradeStation’s efforts may not be successful in anticipating, preventing, detecting or stopping attacks, or reacting in a timely manner. The increasing sophistication and resources of cyber criminals and other non-state actors and increased actions by nation-state actors make it difficult to identify and prevent attacks by new threats and could result in a breach of security. Additionally, TradeStation cannot guarantee that its insurance coverage would be sufficient to cover losses resulting from any such cybersecurity-related incidents, or would cover certain incidents at all.

To the extent the operation of TradeStation’s systems relies on its third-party service providers, through either a connection to, or an integration with, such third parties’ systems, the risk of cybersecurity attacks and loss, corruption, or unauthorized access to or publication of TradeStation information, or the confidential

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information and personal data of customers and employees, may increase. Third-party risks may include insufficient security measures, data location uncertainty, and the possibility of data storage in inappropriate jurisdictions where laws or security measures may be inadequate, and TradeStation’s operational ability to monitor its third-party service providers’ data security practices is limited and may turn out to be insufficient. Although TradeStation has agreements relating to cybersecurity and data privacy in place with many of its third-party service providers which process personal data, those agreements may not be sufficient, and TradeStation cannot guarantee that such agreements will prevent the accidental or unauthorized access to or disclosure, loss, destruction, disablement or encryption of, use or misuse of or modification of personal data or enable TradeStation to obtain adequate or any reimbursement from its third-party service providers in the event TradeStation should suffer any such incidents. Due to applicable laws and regulations or contractual obligations, TradeStation may be held responsible for information security failures or cybersecurity attacks attributed to its vendors as they relate to the information shared with them. A vulnerability in a third-party service provider’s software or systems, a failure of a third-party service providers’ safeguards, policies or procedures, or a breach of a third-party service provider’s software or systems could result in the compromise of the confidentiality, integrity or availability of TradeStation’s systems or the data housed in those third-party solutions.

Separate from external actors, vendors and other external sources of threats or mistakes, TradeStation can make its own mistakes. For example, in 2019 a security incident occurred after a software update was implemented to TradeStation’s online client center which, it turned out, had an error that could allow a customer who logged into his or her account in the client center to view for a brief period of time certain data of a previously logged-in client. While the issue was promptly discovered and rectified, the appropriate customers were promptly notified, and it appears that no harm to any customer resulted, if similar or other mistakes occur in the future the results may be materially less fortunate and could have a material adverse effect on TradeStation’s reputation and account growth and retention, as well as result in costly customer claims and regulatory actions, as well as costly remedial measures.

Any or all of the issues above could materially adversely affect TradeStation’s ability to attract new customers and continue its relationship with existing customers, cause customers to stop using TradeStation products and services, result in negative publicity or subject TradeStation to governmental, regulatory or third-party lawsuits, disputes, investigations, orders, regulatory fines, penalties for violation of applicable laws or regulations or other actions or liability, and significant remedial costs, thereby harming TradeStation’s growth prospects, business, financial condition and results of operations.

TradeStation may also be required to expend significant financial and operational resources in response to a security breach, including repairing system damage, increasing security protection costs by deploying additional personnel and modifying or enhancing its protection technologies, investigating, remediating or correcting the breach and any security vulnerabilities, defending against and resolving legal and regulatory claims, and preventing future security breaches and incidents. Security incidents could also expose TradeStation to a disruption or challenges relating to its daily operations, which could materially adversely affect TradeStation’s business, financial condition and results of operations.

Potential distributed denial of service (“DDoS”) attacks and ransomware attacks are, and will likely continue to be, a large and serious threat to TradeStation’s bus