Abstract:

Regulated short selling transactions is an alternative that was introduced by the Syariah Advisory Council (SAC), which is attached to the Securities Commission Malaysia, to implement short selling in Malaysia. Short selling is not permitted because it involves various Shariah-related issues, including usury, uncertainty (ghārar), gambling, speculation etc. Since short selling has advantageous in terms of liquidity and opportunities for investors to reap profit when the value of securities fall, hence, regulated short selling activities should be restructured so that it can be implemented without transgressing the boundaries of syarak. This qualitative study used the content analysis approach to examine and determine whether the element of usury still exists in regulated short selling. Findings show that regulated short selling transactions adopted by Bursa Malaysia is combined with the Securities Borrowing and Lending (SBL) mechanism. Therefore, implementing regulated short selling in Bursa Malaysia can solve the usury issue when short selling transactions are combined with SBL, which uses the ijarah bi istihan principle.

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