[Islamic Finance Perspective] Why is futures trading considered haram (taboo)?
In the Islamic financial system, futures trading is considered haram (taboo) because of its speculative nature and potential risk of exploitation. Here is a detailed interpretation:
Uncertainty and speculation: Futures trading involves predicting future market trends and profiting from price fluctuations, while traders do not actually own the underlying assets. This speculative behavior may lead to uncertainty and exploitation, and is therefore prohibited by Islamic finance.
Gral and Maisir: Futures trading contains elements of gala (uncertainty) and Maisir (gambling), which is contrary to the principles of Islamic finance. Gral refers to the uncertainty in trading, while Maisir refers to the existence of chance or luck.
Exploitation and injustice: Futures trading may allow for the manipulation of markets and prices, resulting in unfair advantages and disadvantages, which violates the principles of fairness and justice in Islamic finance.
Lack of ownership and possession: In futures trading, buyers and sellers do not actually own or possess the underlying assets, which violates the principles of ownership and possession in Islamic finance.
In summary, futures trading is considered haram in Islamic finance due to its speculative nature, uncertainty, potential risk of exploitation, and lack of ownership and possession. Islamic finance emphasizes fairness, justice, and transparency in all financial transactions, and futures trading does not meet these standards.
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