A fiqhi analysis of tradability of Islamic securities
Views & Download
Secondary markets are vital for the development of Islamic capital markets (ICMs) (Aziz, 2007). They facilitate the reselling of securities among investors, thus adding liquidity to these instruments (Mishkin, 2004: 26-27). Besides this basic role, secondary markets assist in reducing average cost of capital; bringing about a rational representation of the pricing of securities in primary as well as secondary markets; facilitating the exchange of investment risks; evaluating the performance of private and public sector, and mitigating information asymmetry (Ahmed, 1995; Al-Eshkar, 1995; El-Gari, 1993; Mishkin, 2004). However, secondary market trading of Islamic securities involves various issues. One of the greatest concerns is the lack of standardization, or at least harmonization, of ICM products. There are also conflicting resolutions, standards and individual fatwas (Islamic legal opinions) on the tradability of Islamic securities within the industry. It is feared that this creates confusion in the industry and may hinder the overall development of the ICM (Cox, 2005; Shaharuddin et al., 2012). Given the importance and concerns regarding the ICM, this study aims at investigating the vital issue of tradability of Islamic securities from the fiqh (Islamic jurisprudence) perspective.
Fiqh , Islamic security
Habib, F., Laldin, M. A., & Lahsasna, A. (2015). A fiqhi analysis of tradability of Islamic securities. ISRA International Journal of Islamic Finance, 7(1), pp. 159-167.