Karachi Fintech Startup Raises $6.5 Million Seed Round To Launch Derivative Trading App

[Riaz Haq]

Seed Labs, a Pakistani financial technology startup based in Karachi, has raised $6.5 million in seed funding to launch a derivatives trading platform. It was founded about a year ago by four young men in their mid-20s: Yameen Malik, Rabeel Jawaid, Zabi Mohebzada, and Ahmad Jawaid, according to Bloomberg reporter Faseeh Mangi. 

Seed Labs Founders

Seed Labs's first app is designed for decentralized trading of derivatives on commodities, cryptocurrencies and stocks using blockchain technology. Seed Labs is backed by venture money from investors in 9 different countries, including institutional liquidity providers, Alameda Research, Kronos Research, LedgerPrime and others that collectively trade over $28 billions a day, the company said in a statement.

The initial platform planned to launched later this year will primarily be a Perpetual Swap Trading Exchange. It will allow any trade pair from any asset class to be offered — from commodities, equities, digital assets to pre-IPO stocks.  "Right now our target markets are Europe and the Asia Pacific Region. The derivatives exchange is expected to launch in Q3 of this year and is currently undergoing the first round of technical security and penetration testing audits”, Says Zabi, according to a report. 

Seed Labs Trading Platform

Derivatives are contracts whose value derives from something else. They derive their value from price movements, events, or outcomes of an underlying asset. Underlying assets are usually securities like stocks, bonds, index funds, mutual funds, and commodities. Some derivatives track numerical indexes or statistics based on events and outcomes outside the financial realm — like the weather. Derivative financial products come in different forms and do different things. Some try to secure a future price of a commodity, such as wheat, to help limit the risk of future price increases. Others speculate on future stock price movements to seek a profit. Still, others swap currencies and interest rates to gain a comparative advantage. The important thing to remember about derivatives is that without underlying assets they can not exist.

Fintech trading platforms are beginning to make derivatives trading accessible to non-professional investors. Silicon Valley-based Robinhood is an example of such as platform that has been in the news recently. The role of Robinhood app in driving up games retailer GameStop stock price has drawn the scrutiny of regulators at both the SEC and CFTC. The fintech-based trading platforms are seen as a disruptive force by the fintech fans and critics alike. 

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[Riaz Haq]

Insurance grows 22pc but penetration remains minuscule

https://www.dawn.com/news/1712835

The insurance sector grew nearly 22 per cent last year even though its penetration — the ratio of premiums to GDP — stayed at a paltry 0.91pc, a new report showed on Friday.

‘The Insurance Industry Statistics for 2021,’ the Securities and Exchange Commission of Pakistan’s (SECP) first report on the sector, said gross premiums jumped to Rs432 billion in 2021 from Rs355bn a year ago, a growth of 21.7pc.

The size of paid claims rose from Rs170bn to Rs189bn, of which Rs136bn was paid by life insurance and Rs53bn by non-life insurance companies.

The number of policies stood at Rs10.1 million by the end of 2021, including 8m in the life insurance and family takaful segment and 2.1m in the non-life insurance and window takaful segment.

Insurance density — the ratio of gross premiums to the country’s population — stood at Rs2,084, the report said.

As of Dec 31, 2021, the insurance industry had 41 active operators, including 30 non-life insurers/general takaful operators, 10 life insurers/family takaful operators and one reinsurer.

The number of complaints also jumped, the report showed, as the sector received 10,297 complaints in 2021 compared to 8,254 a year ago. However, it also disposed of more complaints: 10,182 vs 8,086.

Of the total gross premiums of the non-life industry, 56pc came from Sindh, followed by 35pc from by Punjab, 7pc from Islamabad, whereas Balochistan, KP, GB and AJK each had a share of less than one per cent.

“As the data clearly demonstrates, Pakistan’s insurance market holds enormous untapped potential for growth,” SECP Commis­s­ioner Sadia Khan said in her remarks in the report.