The Islamic finance sector has witnessed enormous development. This is the case with the derivatives market as well. Derivatives are now being increasingly applied to Shariah complaint products, which presents exciting opportunities for issuers and investors alike. This paper examines the Islamic viewpoint on the new instruments and shows contracts currently used in Islamic finance that may be regarded as derivatives. The validity and permissibility of these instruments appears to vary by scholar. Most scholars agree that, in principle, futures and option contracts may be compatible with Shariah principles. They suggest that derivatives should be used for hedging and arbitrage. What raises objections is the application of these instruments for purely speculative purposes.

Keywords: Islamic finance, Islamic derivatives.

  Dariusz Piotrowski, Derivative Instruments on the Islamic Financial Market - plik pdf; (123 KB)