The Shar’ee ruling regarding futures

Answered according to Hanafi Fiqh by Muftionline.co.za

Q: What is futures and is it permissible?

Bismillaah

A: Futures are contracts where a person agrees to purchase (offer and acceptance) some commodity or currency etc. at a future date. However, in practice, both parties do not intend to actually exchange that commodity. Rather at the due date (date of maturity), the difference between the two exchanges is settled.

For example, Z purchases from Y $100 on the future market at R14 a dollar. The maturity date is set at 1 January 2018. In other words, it is agreed that Z will give Y R1400, and Y will give him $100.

On 1 January 2018, the dollar is trading at R15, which means that $100 is worth R1500. So in other words, Z has to give Y R1400, in exchange of which Y has to give him $100 (which is now worth R1500). So Z has to give R1400, and Y has to give Z R1500.

Therefore, instead of giving the dollars, Y pays Z R100 which is the difference between the two amounts (1500-1400=100).

Hence, Futures are simply defined as: “Contracts for the settlement of differences”.

In other words, these are contracts wherein the exchange of the commodities/currencies is not intended by both parties. Rather, the objective is to settle the difference between the agreed price and present value of a commodity.

People deal in futures for one of two reasons:

Speculation – i.e. in order to make a profit.

Hedging – i.e. in order to cut their losses.

An exposition of hedging is as follows: A intends to travel overseas in a month’s time and will require $1000. The dilemma he is faced with is that the dollar price may rocket in that period. Assuming that the current exchange rate is R14, he is expecting that it might go up to R16.

In order to reduce his cost of the dollars, A will purchase $1000 on the future market for R15 a dollar for example. A month later, the dollar is R16 as A expected. It means that now $1000 will cost R16 000 instead of R14 000. However, since A had already entered into a future contract, he will earn R1000 on that contract because of the rise in the dollar price (A has to pay R15 000 (the price that was agreed in the futures contract) and has to receive R16 000 (the current price)). So, A earns a R1000 in this future transaction). This R1000 will reduce the cost of his dollars because he will pay R16 000 for his dollars, but he earned R1000 at the same time. Therefore, effectively, his cost of the dollars is R15 000.

Shar’ee ruling:

The shar’ee ruilng in regard to futures is that it is not permissible as it is not a sale but rather a form of gambling that one is getting involved in.

And Allah Ta’ala (الله تعالى) knows best.

حدثنا وكيع عن سفيان عن عاصم عن ابن سيرين قال كل شيء فيه خطر فهو من الميسر (مصنف ابن أبي شيبة، الرقم: 26171)

لأن القمار من القمر الذي يزاد تارة وينقص أخرى وسمي القمار قمارا لأن كل واحد من القمارين ممن يجوز أن يذهب ماله إلى صاحبه ويجوز أن يستفيد مال صاحبه فيجوز الازدياد والنقصان في كل واحدة منهما فصار ذلك قمارا وهو حرام بالنص (البحر الرائق 8/554 ، رد المحتار 6/ 403)

فإن الغرر هو الخطر الذي استوى فيه طرف الوجود والعدم بمنزلة الشك (بدائع الصنائع 5/ 163)

والرشوة حرام شرعا وحرمتها ثابتة بالكتاب والسنة وقد ورد في القرآن الكريم قوله تعالى يا أيها الذين آمنوا لا تأكلوا أموالكم بينكم بالباطل وتصدير الخطاب بالنداء والتنبيه للاعتناء بمضمون ما ورد بالآية الكريمة والمقصود من الباطل الأسباب المخالفة للشرع الشريف كالأشياء التي لم يبحها كالغصب والسرقة والخيانة والقمار وعقود الربا (درر الحكام في شرح مجلة الأحكام 4/590)

قوله (والميسر) هو لعب القمار وهو كل لعب تردد بين الغنم والغرم (حاشية البجيرمي على الخطيب 12/ 220)

قد تقدم أن الفاصل بين المسابقة الشرعية والقمار أن المقامر يكون على خطر من أن يغنم أو يغرم بخلاف المسابق فعلى هذا إذا كان الجعل منهما ولم يدخلا محللا لم يجز لوجود معنى القمار فيه وهو الخطر في كل واحد منهما (شرح الزركشي على مختصر الخرقي 7/ 59)

Answered by:

Mufti Zakaria Makada

Checked & Approved:

Mufti Ebrahim Salejee (Isipingo Beach)

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