بازار حصص کی سرگرمیاں اور ان کا شرعی جائزہ

ارشاد احمد اعجاز

جامعۃ الرشید سیمینار سیریز4سیمینار نمبر

ء2016 اکتوبر، 23اتوار،

بسم اللہ الرحمن الرحیم

Stock Market Operations from Islamic perspective

بسم اللہ الرحمن الرحیم

Irshad Ahmad AijazChairman, Shari'ah Supervisory Board

BankIslami Pakistan Limited

[3]

Introduction• Basic questions on stock market:– What is stock market?– Is it a gambling place?– Is it an acceptable marketplace from Islamic

perspective?• Let us see!

[4]

• Stock market is a market for sale of specific items by specific people.

• By nature ‘Exchanges’ are usually 'close circuit markets' which means that only specific people can deal in this market in specific items.

• Those who are authorized for doing business in this markets are called Members and brokers;

• All other people (non-members/brokers) are dependent on these people for trading in this market.

What is ‘Stock Market’?

[5]

• Because of its nature, participants of this market can buy and sell specific items which are registered on it for sale and purchase.

• This registration is called 'listing'.• These items are called 'financial assets'.• Financial assets include 1) Equity, 2) Bond, 3)

Derivatives.• These assets are not available in physical form

any more. They are now kept in digital form only.

Items sold and purchased in this market

[6]

• These assets are kept by a trustee and custodian.

• In Pakistan this trustee and custodian is called CDC.

• CDC keeps all digital assets is a system and no debit and credit is possible without CDC.

• Transfer in system of CDC is a sign of ownership of the account holder.

Items sold and purchased in this market

[7]

• Stock market is a market for members only. • Therefore, sale and purchase always done

through members/brokers only.• No one can buy and sell except through a broker.• The trade is only executed through

computerized system.• This system is called KATS.• Under this mechanism trade is executed by

brokers, settled by a settlement company 

Trading mechanism

[8]

• For governance and good control the company that operates KATS and settles the transaction executed in the stock market through computerized system, is called NCCPL.

• No transaction is possible without NCCPL involement.

• This company ensure ‘logical and guaranteed closure’ of any transaction executed in stock exchange.

• ‘Logical closure’ means completion of the transaction by delivery and payment.

Trading mechanism

• T+3:– Transaction date plus three days to settle the

transaction.– Normal transaction.

• T+0 (Spot):– Same day settlement.– Few transactions.

• Future:– Transaction executed now and settled in a

future date.

[9]

Trading Cycles

• Normal trade:– T+3, T+0 and future are normal trades.– Executed and settled.

• Ready Future:– Buying in ready and sells in future.

• Day trading:– Buying in ready and sells in ready.

• Shorting:– Selling before having the

ownership/possession of stocks.[10]

Trading Methods

• Three types of financing are available:– Direct financing from banks – Margin Trading

System.– Financing through brokers – Margin Financing

System.– Off market financing – from banks or

individuals.• All types of financing are usually interest

based.

[11]

Banking system involvement

[12]

Shari'ah Guidelines for trade and business

Dealing in Haram goods and services

Riba (interest)Maiser & Qimar (gambling) [a type of Gharar]

Gharar (excessive uncertainty)

Haram Economic dealings and activities

Violation of Islamic law of contract●Void contracts;●Suspended (hung) contracts;●Conditional contracts;●Non transparent contracts;

●Business of liquer and other mpermissible or dubious items;●Contract of impermissible services;

●Modern day interest;●Increase in dues (receivables) in case of delays;●Interest on loans and debts;●Some types of FX transactions;

●Pure gambling like betting in casinos;●Gambling in sports and games like paid contests;●Gambling in business like cash settled derivatives (option, future, forward & swaps);

●Non transparent deals;●Interdependent contracts;●Many types of non clarities which ultimately makes the transaction a matter of conflict;●Incomplete information of subject matter or price;

[13]

• This market is acceptable to Islam and nothing contradictory is there in its basic concept.

• Applying what is discussed in previous slide is important.

• By application of these laws some practices of stock market appears to be ‘unacceptable’ to Islam.

• So the whole market is not Haram but some part of it is not according to Shari’ah.

Ruling on stock market

[14]

• No Haram business.– No share of a company deals in Haram is allowed.

• No Riba based activity:– No shares of Riba based companies.– No Ribab based funding and financing.– Special rules on companies which are primarily Halal

but have interest based financing and investment – share screening criteria.

– No bond and TFCs are permissible.

Guidelins on stock market activities

[15]

• No gambling like business:– No gambling based company’s shares.– No gambling like ways of trading.– No shares of commercial insurance.– No future trading.– No derivatives (Futures, options and Swaps etc.)

Guidelins on stock market activities

[16]

• No unacceptable methods of trading:– Sale before possession.– Selling what is not in ownership.– No sale that is executed now but settled in future.

• No financing from interest based resources:– No interest based margin financing is allowed.– No Badla is allowed.– No personal borrowing on interest.

Guidelines on stock market activities

17

Q & A