Journal of Legal, Ethical and Regulatory Issues (Print ISSN: 1544-0036; Online ISSN: 1544-0044)

Abstract

The Islamic Ethical Principles in Commodity Derivatives Contracts

Author(s): Nadhirah Nordin, Rahimah Embong, Normadiah Daud, Siti khatijah Ismail, Siti Fatimah Salleh, Azlin Alisa Ahmad

Islamic ethics is essential for derivatives contracts as Islam emphasizes its significance for the development and betterment of individual and society. From the Islamic worldview, ethics deals with the issues of what is right and what is wrong as well as a code of conduct in the marketplace to ensure the proper practices of commercial dealing and the prevention of unethical doings. Initially, the main purpose of derivatives contracts is risk-hedging. However, the application of derivatives in hedging has caused several arguments and disputes among the majority of Islamic jurists. Thus, this article aims to analyze the concept of Islamic ethics in commodity derivatives contracts. It uses a thematic analysis approach to analyze the content obtained from the related literature. This study found three main principles of Islamic ethics in commodity derivatives contract which are the availability of goods during the contract, taking possession (qabd) in the contract and conformity of contracts with the objectives of Islamic law (maqasid al-shariah).