Regulatory Alerts2025-03-21 | IFPD Circular No. 03Added · Updated
Adoption of AAOIFI Shariah Standard No. 20 on Sale of Commodities in Organized Markets
AAOIFI Shariah Standard No. 20 regarding the sale of commodities in organized markets is adopted for Islamic Banking Institutions with specific clarifications and amendments to its clauses. The adoption defines commodity sales, including spot, forward, and futures contracts, and establishes Shariah rulings for their conclusion and termination. It explicitly prohibits futures contracts and certain impermissible applications such as selling commodities before physical or constructive possession and stipulating unconditional guarantees by agents. The standard also outlines permissible applications, such as spot purchases followed by deferred sales, while excluding indices, currencies, and financial paper from its scope.
Topics
islamic-finance
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