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Derivatives and Shariah

Posted on 06 January 2012

Are derivatives acceptable in Islamic finance? Of course the answer is yes, but one must appreciate the difference between Islamic derivatives and their conventional counterparts. Furthermore, while the use of derivative contracts is acceptable in Islamic finance, there are limits to trading in them.
On a philosophical level, almost all Islamic financial products are in fact examples of derivative contracts. For example, a Sukuk (an Islamic equivalent of a bond) may link the returns of an asset (e.g., a property) to an interest rate mechanism such as LIBOR………………………………………..Full Article: Source

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This post was written by:

Laxman - who has written 19163 posts on Opalesque Islamic Finance Briefing.


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