Risk Management in Islamic Finance: An Analysis of Derivatives Instruments in Commodity Markets

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This study addresses derivatives instruments in Islamic finance. It highlights the benefits of these instruments, their legal aspects and the appropriate alternatives. The forward, futures and options contracts in commodity markets are discussed and the arguments in favour of and against these instruments examined.
The forward contracts issue includes the possibility of trading gold in forward basis, the forward market for currencies and the possible alternative to manage related risks. With the examination of futures contracts, the main arguments against such a contract are addressed, for example the sale prior to taking possession and the sale of debt hedging and speculation. The study proposes khiyar al-shart and bay al-arbun as tools of risk management and alternatives to options. The sale of pure rights is at the center of the admissibility of options in Islamic law and is investigated comprehensively.

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Product Details

  • ISBN-13: 9789004152465
  • Publisher: Brill Academic Publishers, Inc.
  • Publication date: 11/13/2008
  • Series: Brill's Arab and Islamic Laws Series, #1
  • Pages: 338
  • Product dimensions: 6.60 (w) x 9.70 (h) x 1.00 (d)

Meet the Author

Muhammad Al-Bashir Muhammad Al-Amine, Ph.D. (2003) International Islamic University Malaysia, is currently Shariah Compliance Department Manager at Unicorn Investment Bank, Bahrain. He has published extensively on Islamic banking and finance in several reknown journals including Arab Law Quarterly.
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Table of Contents

List of Tables

List of Statutes

List of Cases

List of Contemporary Scholars

The Islamic Fiqh Academies

Ch. 1 Introduction 1

Ch. 2 The Forward Commodities Market 44

Ch. 3 Is it Permissible to Exchange Gold with Paper Money on Forward Basis? 72

Ch. 4 The Forward Market for Currencies 94

The Futures Market

Ch. 5 Concept, Scope of Futures Contracts and Speculation 121

Ch. 6 Sale Prior to Taking Possession, Sale of Debt and Futures Contract 159

Ch. 7 Futures Market Regulation 177

The Options Market

Ch. 8 Concept and Scope 195

Ch. 9 Khiyar Al-Shart, Risk Management and Options 222

Ch. 10 'Arbun Risk Management and Options 237

Ch. 11 The Sale of Pure Rights and the Legality of Options 266

Conclusion 299

Glossary of Arabic Terms 309

Bibliography 319

Index 329

Abstract 333

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