WORLD - PUBLICATIONS - Operative Principles of Islamic Derivatives - Towards a Coherent Theory

Operative Principles of Islamic Derivatives - Towards a Coherent Theory

IMF Working Paper Series

Andreas Jobst and Juan Sole

March 1, 2012

Summary: Derivatives are few and far between in countries where the compatibility of financial transactions with Islamic law requires the development of shari’ah-compliant structures. Islamic finance is governed by the shari’ah, which bans speculation and gambling, and stipulates that income must be derived as profits from the shared generation of goods and services between counterparties rather than interest or a guaranteed return. The paper explains the fundamental legal principles underpinning Islamic finance with a view towards developing a cohesive theory of derivatives subject to shari’ahprinciples. After critically reviewing accepted contracts and the scholastic debate surrounding existing financial innovation in this area, the paper offers an axiomatic perspective on a principle-based permissibility of derivatives under Islamic law. (source)

PUBLICATIONS - FIQH - ISRA - Paper - The Concept and Operations of Swap as a Hedging Mechanism for Islamic Financial Institutions (No 14/2010)

The Concept and Operations of Swap as a Hedging Mechanism for Islamic Financial Institutions - ISRA Research Paper (No. 14/2010) 

Assoc. Prof. Dr. Asyraf Wajdi Dusuki, Head of Research Affairs Department, ISRA 

The paper discusses the concept and operations of the swap instrument as a hedging mechanism in the Islamic financial system.  The main objective of this paper is to give a clearer picture of the swap mechanism as offered by the international Islamic financial institutions and how its operations are structured in accordance with Shariah principles and contracts. 

LEGAL - TAHAWWUT MASTER AGREEMENT - ISDA - Islamic derivatives slow to catch on in Gulf states

DUBAI: Islamic derivatives are still struggling to gain traction in the Gulf, six months after the launch of a much-touted over-the-counter contract aimed at creating a standard legal framework for hedging products.

Experts said the contract, known as the Tahawwut Master Agreement, in theory provides Islamic institutions with a simpler template for risk management that has been approved by syariah scholars.