Conventional futures: a review of major issues from the Islamic finance perspective

Futures contracts, a widely used instrument for hedging and speculation, has recently become of interest in Islamic finance. However, numerous studies have passed restrictive judgment against the legitimateness of futures contracts as it contains components contradicting Islamic law, e.g., offering a nonexistent product, short selling, gambling, and delay of counter values. The objective of this study is to explore shari'ah views on futures contracts. This study suggests that the validity of the contract depends solely on the nature of the agreement, the subject matter and existence of the prohibitive elements. Finally, this study recommends further research and invites collective efforts to innovate shari'ah compliant futures contacts.