LIVEMuslim Views about future trading..
Future trading is prohibited in Islam for the following reasons ¹ ² ³:
- *Gharar*: Futures contracts allow individuals to buy goods that do not exist when signing a contract. It is against Islamic law, which specifies that goods must exist at the time of the actual agreement.
- *Short-selling*: Futures contracts allow traders to sell goods they do not own. Islamic law demands that a seller must have ownership of the object at the time of the contract.
- *No physical delivery*: Futures contracts allow buyers to resell goods or set contract obligations before actual delivery. Islamic law requires physical delivery of the object before resale or settlement.
- *Riba*: Some futures contracts involve dealing in bonds, which is considered riba (usury) and is prohibited in Islam.
- *Uncertainty*: Futures contracts often involve uncertainty, as the object of the contract may not exist or may not be delivered. Islamic law prohibits contracts with excessive uncertainty.
- *No hand-to-hand exchange*: Some futures contracts do not involve a hand-to-hand exchange, which is required in Islamic law for a transaction to be permissible.
- *Dealing in debt*: Futures contracts often involve dealing in debt, which is not allowed in Islam.
- *Cash settlement*: Many futures contracts are cash-settled, which means that the contract is settled in cash rather than by delivering the underlying asset. This is not permissible in Islam.
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