A Jurisprudential Investigation of Derivative Instruments in the Financial Market

The function and development of derivative instruments in financial market has resulted in discussions about their validity and permissibility in Islamic jurisprudence. The future contracts are related to the validity of certain contracts such as dayn ba dayn and kali ba kali transactions. Future contracts are of different forms. By rejecting some of objections on dayn ba dayn contracts, one can infer the validity of some forms of future contracts. But one should differentiate between primary and secondary markets. One should not regard option contract as the same with qawlnameh or insurance or baya-ul-arbun; though it has the capability to be legally rectified.