The 2010 Tahawwut Master Agreement: Paving the Way for Shari'ah-Compliant Hedging

Fagerer, Richard; Pikiel, Michael E.; McMillen, Michael J. T.

doi:10.2139/ssrn.1670118

Cited by 2 publications

(2 citation statements)

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“…While there are attempts to standardize global framework for setting basic terms for Sharia complaint hedging transaction on over the counter markets such as ISDA-IIFM 2010 Tahawwut Master Agreement still do not give rise to an actual transaction. The parties must enter into additional agreements for a real transaction (Fagerer, Pikiel, and McMillen, 2010). So this standardized agreement just gives a framework for contract and real contract will be discussed later in order to make the whole transaction vulnerable from gharar side.…”

Section: Resultsmentioning

confidence: 99%

Challenges Facing Financial Engineering with Islamic Rules

Al-Taani¹

2013

IJEFM

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Despite their importance in financial sector development, derivatives are still not generally accepted as legitimate products in Islamic finance. Conventional derivatives and the world of Islamic financial products has chasm between each other as they have different approaches in important issues like interest and ambiguity. While recent events in the world economy have sparked a global debate on derivatives and the damage caused by them, strict Sharia rules saved Islamic finance institutions from the worst of the crisis. On the other hand, due to lack of sufficient instruments for protection against volatility in currency, interest rate and commodity prices, the ability of Islamic finance institutions to survive future shocks is in question. As the Islamic banks are struggling to develop hedging tools with regard to doubt on their usage cased by religious differences, this article explores the validity of derivatives in accordance with basic legal principles of the Sharia and summarizes the key objections of scholars that challenge the permissibility of derivatives under Islamic law. In conclusion, the article delivers suggestions for Sharia compliance of derivatives .

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Section: Resultsmentioning

confidence: 99%

Challenges Facing Financial Engineering with Islamic Rules

Al-Taani¹

2013

IJEFM

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“…The growth of Islamic finance attracts global financial institutions, such as HSBC, Deloitte Touché Tohmatsu, and Palisades Park Capital who have established Islamic finance capabilities. These institutions have become involved in serving customers who seek to engage in Shariah compliant financial alternatives (Fagerer et al, 2010). As a consequence of regulatory and market pressures most products that are deemed Shariah compliant are no longer based on assets as is guided by the faith-based rules.…”

Section: It Is Very Restrictive For An Islamic Retail Bank To Do What...mentioning

confidence: 99%