Trading is permissible in Islam when it is conducted through lawful assets, clear ownership, and ethical practices. Permissibility depends on avoiding interest (riba), excessive uncertainty (gharar), and speculative behavior (maysir), while ensuring transparency and fairness in all transactions.
Shariah-compliant finance is grounded in ethical responsibility, fairness, and real economic activity. Financial transactions must be conducted in a manner that promotes transparency, shared responsibility, and social benefit, while avoiding practices that lead to exploitation or unjust enrichment.
All activities are evaluated not only by their outcomes, but by the structure, intent, and conduct through which they are carried out.
Profit-sharing is a foundational concept in Islamic finance that allows capital providers and managers to share profits based on pre-agreed ratios. Structures such as Mudarabah emphasise ethical partnership, where profits are shared fairly and losses are allocated in accordance with Islamic principles.
Risk is an inherent part of trade, and Islam recognises its presence while placing strong emphasis on responsibility and clarity.
Islamic finance promotes transparent risk disclosure, disciplined risk management, and accountability, without guaranteeing returns or relying on speculative mechanisms.
Islamic finance strictly prohibits the earning or payment of interest (riba), as it represents a guaranteed return without shared risk. Capital should not generate profit solely by virtue of being lent; instead, returns must be linked to legitimate economic activity and the assumption of risk.
As a result, Shariah-compliant trading structures avoid interest-based instruments, swaps, or financing arrangements.
Transactions involving excessive ambiguity, unclear terms, or unknown outcomes are not permissible. Islamic principles require that contractual obligations, ownership, pricing, and risk exposure are clearly defined and understood by all parties.
This emphasis on clarity promotes fairness, informed decision-making, and ethical engagement in financial markets.
Speculative behaviour that resembles gambling — where outcomes rely predominantly on chance rather than analysis and structure — is prohibited. Islamic finance discourages trading practices that prioritise rapid gains through excessive leverage or high-risk speculation.
Permissible trading focuses on disciplined strategies, informed judgment, and responsible risk-taking.
Islam recognizes that risk is inherent in trade and investment. However, risk must be approached responsibly, with full disclosure and shared accountability. Returns are not guaranteed, and outcomes are accepted as part of ethical participation in markets.
This framework encourages prudent risk management, capital preservation, and alignment between participants.
Shariah principles place strong emphasis on honesty, disclosure, and integrity. All financial activities should be conducted transparently, with clear communication regarding risks, limitations, and responsibilities.
Ethical conduct is viewed as an essential component of sustainable and trustworthy financial practice.
Permissible financial activity relies on structured agreements that align with Islamic principles and ethical standards. These arrangements define roles, responsibilities, and expectations clearly, ensuring that all parties operate within agreed frameworks.
Such structure supports accountability, fairness, and long-term sustainability.
Shariah compliance involves both principles and interpretation. While these guidelines outline foundational concepts of Islamic finance, individual participation decisions should be made with appropriate due diligence and, where necessary, independent scholarly consultation.
These principles guide how strategies are structured and executed and do not constitute religious, legal, or financial advice.