ISSUES IN ISLAMIC HEDGING PRACTICES: A CRITICAL ANALYSIS

[...]the following international Shan'ah standard-setting bodies and other Shan'ah authorities outside Malaysia have issued resolutions acknowledging the need for hedging and discussing various instruments to be used for that purpose: * the Islamic Fiqh Academy of the Organisation of Islam...

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Bibliographic Details
Published in:ISRA international journal of Islamic finance 2016, Vol.8 (2), p.105
Main Authors: Kasri, Noor Suhaida, Rahman, Zaharuddin Abd, Mohamad, Shamsiah, Habib, Farrukh
Format: Article
Language:English
Subjects:
Commodities
Councils
Exposure drafts
Financial institutions
Foreign exchange rates
Hedging
Interest rates
Islamic financing
Islamic law
Qualitative research
Research methodology
Risk management
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Summary:[...]the following international Shan'ah standard-setting bodies and other Shan'ah authorities outside Malaysia have issued resolutions acknowledging the need for hedging and discussing various instruments to be used for that purpose: * the Islamic Fiqh Academy of the Organisation of Islamic Cooperation (IFA-OIC); * the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI); * the International Islamic Financial Market (IIFM); * Dallah al-Baraka (DAB); * National Sharia Board-Indonesian Council of Ulama (DSNMUI).[...]a hedger cannot be allowed to profit on the basis of an external factor that is uncertain at the time of entering into the contract, for example, future interest rates or future currency exchange rates.[...]the Shan'ah does not allow one party to gain when the amount of gain is given not on the basis of holding a commodity but on the basis of mark-to-market, as this would trigger the element of gambling.
ISSN:0128-1976
2289-4365