Single Stock Futures Accepted as Syariah-compliant
June 27 2006

THE Securities Commission's (SC) Syariah Advisory Council (SAC) has approved single stock futures (SSF) as a Syariah-compliant instrument, provided that the underlying stocks of the SFF are Syariah-compliant.

This gives investors another Islamic investment alternative as well as a tool to manage risks.

It is also in line with the SC's plan to introduce more competitive and innovative Islamic financial products and services.

Based on SAC's list of Syariah-compliant stocks as at April 2006, five of the ten Syariah-compliant SSFs currently trading on Bursa Malaysia Derivatives are AirAsia Bhd, IOI Corp,Maxis Communications Bhd, Scomi Group and Telekom Malaysia Bhd.

SSFs were approved by the SAC on the basis that the instruments are free of elements pertaining to gambling, buying and selling something which does not exist, ignorance and uncertainty.

Another condition is that the instrument is traded in clear quantities and pricing is based on market demand and supply.

SSFs were introduced by Bursa Malaysia two months ago as a tool for managing share price risk and as a more cost-effective way to gain exposure to the local equity market.

Courtesy Business Times Malaysia

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