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Sharia and securities trading

Index Sharia and securities trading

The Islamic banking and finance movement that developed in the late 20th century as part of the revival of Islamic identity,Usmani, ''Introduction to Islamic Finance'', 1998: p.6 sought to create an alternative to conventional banking that complied with sharia (Islamic) law. [1]

48 relations: Benchmarking, Call option, Currency swap, Day trading, Derivative (finance), Fiqh, Fixed rate bond, Foreign exchange market, Forward contract, Futures contract, Gambling, Gharar, Hadith, Halal, Hanafi, Hanbali, Haram, Harvard University Press, Indexation, International Centre for Education in Islamic Finance, International Swaps and Derivatives Association, Investopedia, Islamic banking and finance, Islamic economics, Islamic finance products, services and contracts, Islamic revival, Life insurance, Madhhab, Maisir, Margin (finance), Muamalat, Mubah, Murabaha, Option (finance), Profit and loss sharing, Put option, Quran, Riba, Securitization, Shafi‘i, Sharia, Short (finance), Special-purpose entity, Speculation, Swap (finance), Ulama, Usury, Workaround.

Benchmarking

Benchmarking is comparing ones business processes and performance metrics to industry bests and best practices from other companies.

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Call option

A call option, often simply labeled a "call", is a financial contract between two parties, the buyer and the seller of this type of option.

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Currency swap

In finance, a currency swap (more typically termed a cross-currency swap (XCS)) is an interest rate derivative (IRD).

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Day trading

Day trading is speculation in securities, specifically buying and selling financial instruments within the same trading day.

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Derivative (finance)

In finance, a derivative is a contract that derives its value from the performance of an underlying entity.

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Fiqh

Fiqh (فقه) is Islamic jurisprudence.

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Fixed rate bond

In finance, a fixed rate bond is a type of debt instrument bond with a fixed coupon (interest) rate, as opposed to a floating rate note.

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Foreign exchange market

The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies.

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Forward contract

In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or to sell an asset at a specified future time at a price agreed upon today, making it a type of derivative instrument.

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Futures contract

In finance, a futures contract (more colloquially, futures) is a standardized forward contract, a legal agreement to buy or sell something at a predetermined price at a specified time in the future.

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Gambling

Gambling is the wagering of money or something of value (referred to as "the stakes") on an event with an uncertain outcome with the primary intent of winning money or material goods.

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Gharar

Gharar (غرر) literally means uncertainty, hazard, chance or risk.

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Hadith

Ḥadīth (or; حديث, pl. Aḥādīth, أحاديث,, also "Traditions") in Islam refers to the record of the words, actions, and the silent approval, of the Islamic prophet Muhammad.

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Halal

Halal (حلال, "permissible"), also spelled hallal or halaal, refers to what is permissible or lawful in traditional Islamic law.

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Hanafi

The Hanafi (حنفي) school is one of the four religious Sunni Islamic schools of jurisprudence (fiqh).

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Hanbali

The Hanbali school (المذهب الحنبلي) is one of the four traditional Sunni Islamic schools of jurisprudence (fiqh).

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Haram

Haram (حَرَام) is an Arabic term meaning "forbidden".

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Harvard University Press

Harvard University Press (HUP) is a publishing house established on January 13, 1913, as a division of Harvard University, and focused on academic publishing.

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Indexation

Indexation is a technique to adjust income payments by means of a price index, in order to maintain the purchasing power of the public after inflation, while deindexation is the unwinding of indexation.

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International Centre for Education in Islamic Finance

INCEIF (International Centre for Education in Islamic Finance) was set up by Bank Negara Malaysia (Central Bank of Malaysia) in 2005 to develop human capital for the global Islamic finance industry.

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International Swaps and Derivatives Association

The International Swaps and Derivatives Association (ISDA) is a trade organization of participants in the market for over-the-counter derivatives.

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Investopedia

Investopedia is a privately owned website based in New York City that focuses on investing education and financial news.

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Islamic banking and finance

Islamic banking or Islamic finance (مصرفية إسلامية) or sharia-compliant finance is banking or financing activity that complies with sharia (Islamic law) and its practical application through the development of Islamic economics.

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Islamic economics

Islamic economics (الاقتصاد الإسلامي) is a term used to refer to Islamic commercial jurisprudence (فقه المعاملات, fiqh al-mu'āmalāt).

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Islamic finance products, services and contracts

Banking or banking activity that complies with sharia (Islamic law)—known as Islamic banking and finance, or shariah-compliant finance—has its own products, services and contracts that differ from conventional banking.

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Islamic revival

Islamic revival (تجديد, lit. "regeneration, renewal"; also الصحوة الإسلامية, "Islamic awakening") refers to a revival of the Islamic religion.

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Life insurance

Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person (often the policy holder).

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Madhhab

A (مذهب,, "way to act"; pl. مذاهب) is a school of thought within fiqh (Islamic jurisprudence).

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Maisir

In Islam, gambling (translit)), is forbidden (script). According to investment-and-finance.net, the term "maisir" was "originally used" as a reference to a "pre-Islamic game of arrows in which seven persons gambled for shares (portions) of an allotted prize". Maisir is prohibited by Islamic law (shari'a) on the grounds that "the agreement between participants is based on immoral inducement provided by entirely wishful hopes in the participants' minds that they will gain by mere chance, with no consideration for the possibility of loss".;Definitions Both qimar and maisir refer to games of chance, but qimar is a kind (or subset) of maisir. Author Muhammad Ayub defines maisir as "wishing something valuable with ease and without paying an equivalent compensation for it or without working for it, or without undertaking any liability against it by way of a game of chance", Another source, Faleel Jamaldeen, defines it as "the acquisition of wealth by chance (not by effort)". Ayub defines qimar as "also mean receipt of money, benefit or usufruct at the cost of others, having entitlement to that money or benefit by resorting to chance"; Jamaldeen as "any game of chance".;In scripture It is stated in the Quran that games of chance, including maisir, are a "grave sin" and "abominations of Satan's handiwork". It is also mentioned in ahadith.

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Margin (finance)

In finance, margin is collateral that the holder of a financial instrument has to deposit with a counterparty (most often their broker or an exchange) to cover some or all of the credit risk the holder poses for the counterparty.

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Muamalat

Muamalat (also muʿāmalāt, معاملات., literally "transactions"TBE, "CHAPTER A1, INTRODUCTION TO ISLAMIC MUAMALAT", 2012: p.6 or "dealings") is a part of Islamic jurisprudence, or fiqh.

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Mubah

Mubah (Arabic: مباح) is an Arabic word meaning "permitted", which has technical uses in Islamic law.

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Murabaha

Murabaḥah, murabaḥa or murâbaḥah (مرابحة, derived from ribh ربح, meaning profit) was originally a term of fiqh (Islamic jurisprudence) for a sales contract where the buyer and seller agree on the markup (profit) or "cost-plus" price for the item(s) being sold.

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Option (finance)

In finance, an option is a contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price on a specified date, depending on the form of the option.

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Profit and loss sharing

Profit and Loss Sharing (also called PLS or "participatory" banking is a method of finance used by Islamic financial or Shariah-complaint institutions to comply with the religious prohibition on interest on loans that most Muslims subscribe to. Many sources state there are two varieties of profit and loss sharing used by Islamic banks — Mudarabah (مضاربة) ("trustee finance" or passive partnership contract) and Musharakah (مشاركة or مشركة) (equity participation contract). Other sources include sukuk (also called "Islamic bonds") and direct equity investment (such as purchase of common shares of stock) as types of PLS.Khan, ''Islamic Banking in Pakistan'', 2015: p.91 The profits and losses shared in PLS are those of a business enterprise or person which/who has obtained capital from the Islamic bank/financial institution (the terms "debt", "borrow", "loan" and "lender" are not used). As financing is repaid, the provider of capital collects some agreed upon percentage of the profits (or deducts if there are losses) along with the principal of the financing. Unlike a conventional bank, there is no fixed rate of interest collected along with the principal of the loan. Also unlike conventional banking, the PLS bank acts as a capital partner (in the mudarabah form of PLS) serving as an intermediary between the depositor on one side and the entrepreneur/borrower on the other. The intention is to promote "the concept of participation in a transaction backed by real assets, utilizing the funds at risk on a profit-and-loss-sharing basis". Profit-and-loss-sharing is one of "two basic categories" of Islamic financing, the other being "debt-based contracts" (or "debt-like instruments") such as murabaha, istisna'a, salam and leasing, which involve the "purchase and hire of goods or assets and services on a fixed-return basis". While early promoters of Islamic banking (such as Mohammad Najatuallah Siddiqui) hoped PLS would be the primary mode of Islamic finance, use of fixed return financing now far exceeds that of PLS in the Islamic financing industry.

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Put option

In finance, a put or put option is a stock market device which gives the owner of a put the right, but not the obligation, to sell an asset (the underlying), at a specified price (the strike), by a predetermined date (the expiry or maturity) to a given party (the seller of the put).

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Quran

The Quran (القرآن, literally meaning "the recitation"; also romanized Qur'an or Koran) is the central religious text of Islam, which Muslims believe to be a revelation from God (Allah).

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Riba

Riba (ربا,الربا، الربٰوة) can be roughly translated as "usury", or unjust, exploitative gains made in trade or business under Islamic law.

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Securitization

Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling their related cash flows to third party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt obligations (CDOs).

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Shafi‘i

The Shafi‘i (شافعي, alternative spelling Shafei) madhhab is one of the four schools of Islamic law in Sunni Islam.

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Sharia

Sharia, Sharia law, or Islamic law (شريعة) is the religious law forming part of the Islamic tradition.

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Short (finance)

In finance, a short sale (also known as a short, shorting, or going short) is the sale of an asset (securities or other financial instrument) that the seller does not own.

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Special-purpose entity

A special-purpose entity (SPE; or, in Europe and India, special-purpose vehicle/SPV, or, in some cases in each EU jurisdiction – FVC, financial vehicle corporation) is a legal entity (usually a limited company of some type or, sometimes, a limited partnership) created to fulfill narrow, specific or temporary objectives.

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Speculation

Speculation is the purchase of an asset (a commodity, goods, or real estate) with the hope that it will become more valuable at a future date.

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Swap (finance)

A swap is a derivative contract where two parties exchange financial instruments.

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Ulama

The Arabic term ulama (علماء., singular عالِم, "scholar", literally "the learned ones", also spelled ulema; feminine: alimah and uluma), according to the Encyclopedia of Islam (2000), in its original meaning "denotes scholars of almost all disciplines".

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Usury

Usury is, as defined today, the practice of making unethical or immoral monetary loans that unfairly enrich the lender.

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Workaround

A workaround is a bypass of a recognized problem or limitation in a system.

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Derivatives and Sharia compliance, Put and call options and Sharia compliance, Short sales and Sharia compliance.

References

[1] https://en.wikipedia.org/wiki/Sharia_and_securities_trading

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