Why short-selling is Haram
Amid the financial crisis, the US stock market regulator SEC banned short selling on September 24, but it aims to lift this ban on Thursday, October 9. In Islamic Finance, however, ‘to go short’ will always be Haram.
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After the enactment of a $700bn rescue package for Wall Street, the SEC, however, announced that the ban would be lifted on Wednesday, at 23.59.
Short selling occurs when stock market participants sell stocks or commodities they do not own in order to profit later from an anticipated fall in prices. It is a strategy widely used by hedge funds, which often are blamed for contributing to the fall of market instruments.