Necessity of Developing Islamic Securities

When discussing financing process as well as various kinds of financial instruments and their development as a method of finance, the conversion of assets into securities comes to the fore as one of the main methods of finance. Securities, as one of the instruments used for this purpose, cannot be used in a system of usury-free banking because they entail fixed interest rate. Therefore, bonds, as a substitute for securities in usury-free banking, are discussed along with their disadvantages, and emphasis is put on the need to define and use a new financial instrument as a suitable substitute for securities. The Islamic securities are then defined and discussed from various viewpoints including conformity to law and sharia, advantages and disadvantages, similarities to and differences with conventional securities, as well as experiences and performance of other countries with regard to publishing bonds. In conclusion, emphasis is put on three characteristics of bonds; that is, legality, acceptability and efficiency, before reaching the conclusion that these bonds are a good and useful substitute for securities. The necessity for the government to take action to define, support and take advantage of this new financial instrument in the Iranian economy is also underlined.