RESLUTION No. 74/5/8 CONCERNING SHARI’A APPLICATIONS FOR THE ESTABLISHMENT OF THE ISLAMIC MARKET

Quote-The Council of the Islamic Fiqh Academy, holding its Eighth Session in Bander Seri Begawan, Brunei Darussalam, from 1 to 7 Muharram 1414H(21-27 June 1993)

Having considered the researches received by the Academy on “Shari’a application for the establishment of the ‘Islamic Market’ which were elaborated as a supplement to the issues of Islamic money markets and currency notes which were debated in earlier sessions, particularly at the seventh session held in Jeddah as well as in the symposium organized by the Academy for this purpose, with the aim of evolving a set of adequate legitimate instruments for a money market given the fact that the later represents mechanism that can absorb the cash-flow available in the Islamic countries and achieve the developmental objectives of mutual support, balance and complementary between the Islamic countries.

Having listened to the deliberations on the optimal way to benefit from the various modes for the full realization of the Islamic market, namely shares, bonds and special contracts for the establishment of the Islamic market anchored in Shari’a.

RESOLVES

First Shares

Second:	Stocks(Bonds)
The Islamic Fiqh Academy issued its Resolution No. 63/1/7 on Money Markets: share, options, commodities and currency, elucidating the rules applicable to them and the manner in which they can be utilized for the establishment of the Islamic Financial Market.
a)Muqarada bonds and Investment Bonds, the Islamic Fiqh Academy issued its Resolution No. 30/5/4 on Muqarada bonds
b)Leasing or lend-leasing bonds, have been the subject of the Academy’s Resolution No. 44/6/5. Thus these bonds can play a useful role in the Islamic Financial Market in terms of public interest.

Third:	Forward buying contracts (Salam)
As Salam (forward buying) contract covers a wide scope considering its terms and conditions, it benefits the buyer in investing his surplus funds for profit, as well as the seller in securing adequate commodity prices. The Academy’s Resolution No. 63/1/7 is thereby reiterated to the effect that a commodity which is subject of a forward contract cannot be sold until it is received. The Resolution stipulates “A commodity purchased through a Salam (forward buying) contract cannot be sold before it is received).”
Fourth:	Manufacture Contracts(Istisna’a)
The Academy issued its Resolution No. 65/3/7 concerning manufacture (Istisna’a) contracts.
Fifth:	Deferred Sale
Deferred sale is another mode of investment which facilitates purchasing transactions as it benefit both the purchaser who gets immediate access to the commodity while paying later, and the seller who secures higher prices. This results in a broader distribution and availability of commodities for the society.
Sixth:	Pledges and commitments
The Academy issued its Resolution No. 40-41/2-3/5 on pledges and commitments in Murabaha for the benefit of party making the orderer of purchase.

THE ACADEMY RECOMMENDS THE FOLLOWING:

INVITES research scholars and economists to prepare studies and researches, on the topics that have not yet been discussed thoroughly, so as to elicit their applicability and draw on them in A Shari’a compatible manner in the Islamic Financial Market. Such topics include the following:

a) Musharaka Bonds with all their ramifications

b)      The elaboration of leasing or lend-leasing contracts.
c)      Compensation for Salam (forward buying), consensus settlement, discount, association, proxy, etc.
d)      Pledges in other than Murabaha sales and particularly in currency exchange.
e)      Debt redemption
f)      Honorable settlement in the money market (compensation, etc.)
g)      Clearing

Allah knows best…Unquote

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