UAE</li></li></ul><li>Objectives<br /><ul><li>To protect themselves from the threat posed by the Iran-Iraq War
It was established with the political systems based on Islamic beliefs, joint destiny and common objectives.
The geographic proximity of the these countries and their general adoption of free trade economic policies are factors that encouraged them to establish the GCC. </li></li></ul><li>REVENUE SOURCES<br />OIL & GAS RESERVE<br />GOLD & MINING INDUSTRY<br />TRAVEL & TORISIM INDUSTRY<br />REAL ESTATE<br />
PRESENT DERIVATIVE MARKET<br /><ul><li>UAE (Dubai initiated by NASDAQ)
Kuwait</li></li></ul><li>Current scenario of Derivatives Market<br />"Markaz" initiated a proposal to provide the Options service in Kuwait Stock Exchange in year 2002. <br />Trades in options through a Fund viz., "Forsa Fund" to work as a market maker for options trading in the first stage. <br />In March 2005, KSE allowed Call options to be traded by Forsa Fund. <br />Put Options does not exist in GCC as of now.<br />
Forsa Option :<br /><ul><li>Should be a Member in KSE.
Contract –Market Maker(Forsa Fund ) & Buyer (Trader).
Provides with a ask and bid price.</li></li></ul><li>Mechanism of an Option-3 way settlement.<br /><ul><li>He can sell the contract back to the buyer (Forsa fund).
Trading has to be done with the same broker who executed the original deal.
Take no action let the option expire.</li></li></ul><li>Brokerage and Commission Charges<br />They are charged to both the buyer and the market maker.<br />Total brokerage charged is 5.5% of the contract value.<br />
Forwards/Future ContractIn Dubai Market <br />Premium + 40% of the underlying stock value<br />Market Maker <br />Buyer<br />X<br />Gives the share <br />to KSE<br />KSE<br />If there is loss & the buyer refuses to pay<br />the 60% then the shares go back<br /> to the market maker.<br />
Futures<br />Similar to Forward Contracts<br />The basic difference is Forwards are traded after market hours (i.e. 12:45 to 1:15) while Futures are traded during market hours(i.e. 9:30 to 12:15)<br />
Forward Contract In Indian Market<br />Long Position <br />Short Position<br />Buyer <br />Mr. X<br />Seller<br />Mr. Y<br />Exchange an Asset<br />In Future @ Today’s Pre-agreed price at a particular period.<br />If there is a loss of seller, he can cancel the agreement & Vice Versa. Hence, there is no obligation in this particular contract .<br />
Reduce the brokerage, clearing & settlement fees .
Expanding the number of market maker .</li></li></ul><li>Conclusion<br />Yes, Oil Economies need Synthetic Product<br />Within the scope of Shariyat Laws Islamic Scholars should find ways to invest in Derivatives Market. <br />