Fiqh Issues in Short Selling as Implemented in the Islamic Capital Market in Malaysia

Although short selling instruments violate the general Islamic rule of ‘do not sell what you do not own’, they have been legalazied by the Shari’ah Advisory Council (SAC) of Malaysian Securities Commission to be used in Islamic Capital Market in Malaysia. In this paper authors aim to study fiqh issues related to the short selling instruments. In particular, the authors will discuss in details three main issues, namely the issue of bay’ ma’dum (selling what the seller does not own), the eligibility of stock as object of a loan contract and benefiting from the loan contract.