News Category: Public
Register Date: Aug 25 2019
Publish Date: May 15 2019

Looking for Shariah compliant alternatives to conventional short sale contract

Shariah Board of SEO resolved that Wakalah Based alternative for conventional short sale will follow shariah principles

Securities and Exchange Organization of Iran is planning to develop capital market investment portfolio in compliance with Shariah principles. For this reason, conventional short sale contract was under study in several meetings in its shariah board. The 1st shariah compliant alternative was based on two sale contracts (i.e. a cash sale plus a salam sale) which was not implemented in the capital market for its operational limitations.
However, as the market was in great appetite for launching short sale, the issue was re proposed to the board and after some negotiations, the board approved a Shariah compliant model for conventional short sale which is based on wakalah contract. In the resolved model, the short seller as equity owner' s agent, will have the right to sell his/her equity and return it back as its own demand or if the owner desires.

KeyWords: Short Sale, Shariah Board, Securities and Exchange Organization, Wakalah Contract


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