Investigating the implications of derivative securities in emerging stock markets: The Islamic perspective

This article presents a preliminary framework for structuring derivative securities in Muslim stock markets. It is evident that derivative markets play a crucial role in the global financial system and make a vital contribution to creating an efficient economic system. However, the Islamic perspecti...

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Bibliographic Details
Published in:Journal of derivatives & hedge funds 2011-08, Vol.17 (2), p.115-121
Main Authors: Abumustafa, Naser I, Al-abduljader, Sulaiman T
Format: Article
Language:English
Subjects:
American dollar
Currency
Derivatives
Emerging markets
Financial instruments
Futures
Hedging
Interest rates
International finance
Investments
Investors
Islamic financing
Options markets
Options trading
Put & call options
Securities markets
Stochastic models
Stock exchanges
Studies
Volatility
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Summary:This article presents a preliminary framework for structuring derivative securities in Muslim stock markets. It is evident that derivative markets play a crucial role in the global financial system and make a vital contribution to creating an efficient economic system. However, the Islamic perspective on derivative securities, including the possible restrictions on derivative trading, has not been closely examined. This article attempts to fill this gap in the literature by presenting the current stance of Gulf Cooperative Countries capital markets. The article also examines the Kuwaiti experience with options trading and provides recommendations for adequately applying 'sharia-compliant' derivative securities to global financial markets. [PUBLICATION ABSTRACT]
ISSN:1753-9641
1753-965X
DOI:10.1057/jdhf.2010.7