Which work is this?
The old ISRA article 361 is associated with this title by IEFpedia. Its 21 October 2009 posting date does not date the paper. A later duplicate catalogue posting is also not a new research version. The recovered conference file is a source to read; equivalence to the exact lost article body remains unverified. Sources: CAT09, FX09
This record concerns this specific work. The separately planned 2016 critical-analysis note, Legacy 71, is a different source and is not used to fill its contents.
- Recovered author
- Asyraf Wajdi Dusuki
- Original title
- Shariah Parameters on Islamic Foreign Exchange Swap as Hedging Mechanism in Islamic Finance
- Recovered version
- 25-page conference paper; University of Leicester, 2–3 July 2009. FX09
- Journal citation
- A separate catalogue lists a closely titled article in ISRA International Journal of Islamic Finance, 1(1), 77–99 (2009). Full journal revision not recovered. J09
What the original discusses
Dusuki discusses tawarruq and wa`d structures. His parameters address real transactions, ownership effects, separate agreements, their independence and sequence, and hedging rather than speculation. These are attributed historical arguments, not fresh institutional approval. Sources: FX09
Tawarruq uses commodity purchases and resales to obtain cash, leaving payment obligations. Wa`d means a promise. Bay al-sarf is the currency-exchange contract; it is distinct from the undertaking about a later exchange. The paper describes these structures rather than proving execution of any customer transaction. Sources: FX09
In the paper’s two-set tawarruq example, the investor’s commodity sale leaves the bank owing dollars, while a separate bank sale leaves the investor owing euros. Resales supply cash at the outset; the reciprocal currency debts remain payable at maturity. Commodity ownership and resale do not cancel those debts. This is the author’s historical structure, not a customer transaction verified here. Sources: FX09
On p.18 the paper sets out these transaction tests: Sources: FX09
- Agreements are real, not fictitious.
- Each has its own effect, including genuine ownership and the buyer’s ability to keep, use or sell the asset.
- Agreements are separate.
- One agreement is not made conditional on another.
- Each contract involving an exchange of value, including a commodity sale, fulfils its required elements and conditions, with a clear, real and provable transaction.
- Contracts follow the correct sequence while remaining independent.
1. The paper’s wa`d sequence
Historical structure • qualitative simplification
- First currency exchangeInvestor exchanges the original currency for another currency with the bank.
- Promise for the return exchangeThe later exchange rate is determined today; the promise is distinct from that later contract.
- Separate exchange at expiryThe investor exchanges back into the original currency using a separate bay al-sarf contract.
Full text alternative
The paper describes an initial exchange from the investor’s original currency to another currency, followed by a promise for a future exchange at a rate determined today. At expiry, a separate bay al-sarf exchange returns the investor to the original currency. The promise and the future exchange contract are distinct. No original example amounts are reused, no investment return is guaranteed, and no contemporary product approval is established.
How to use it alongside Malaysian policy
The BNM policy linked from its current register requires delivery and possession before the exchange session ends, with specified exceptions for operational constraints or unexpected disruption. Possession may be physical or constructive. Its promise arrangements in paragraphs 16.1–16.3 are restricted to hedging by 16.4. Sources: BNM18
Reader implication: ask for the settlement and possession process, not just a promise document. The policy’s specific exceptions also mean “spot” should not be reduced to an unsupported rule that every transfer must occur within one literal second. The 2009 analysis and later Malaysian policy have different dates and authority. Sources: BNM18
Constructive possession means more than a record entry: paragraph 14.8 requires access to the currency and assumption of its ownership risk. Under 14.9 the seller remains responsible for delivery and bears that risk until the buyer takes physical or constructive possession. Ask when these changes actually occur in the proposed process. Sources: BNM18
2. Read each layer for a different purpose
Evidence and date map
Full text alternative
The conference paper is dated July 2009. The old-article catalogue posting is dated October 2009. Separate journal metadata lists December 2009. BNM policy was issued April 2018 and generally became effective April 2019, except paragraph 25. A personal transaction needs its own dated documentation. These layers do not establish identical versions or personal approval.
Start with the business obligation
New editorial example: a small Malaysian importer knows the amount and date of an overseas supplier invoice. It can identify the exposure it wants to manage. If the supplier cancels the order, the importer must check whether any separate undertaking or contract still remains. A need for dollars does not establish that a two-exchange swap is the appropriate structure.
3. Why an importer notices exchange-rate risk
New fictional illustration • no hedging contract
Method: USD10,000 × RM per USD. Bars share a RM50,000 scale.
Full text alternative
For a fictional USD10,000 invoice, a rate of RM4.00 per dollar produces RM40,000; RM4.30 produces RM43,000; RM4.60 produces RM46,000. The RM6,000 difference is a currency-conversion difference, not a swap payoff. No fee, tax, funding cost or hedging contract is included. BNM is cited for currency-exchange scope, not for these fictional rates.
Costs, ownership and obligations to verify
A public CIMB Islamic master template covers FX-i, options and structured forwards with schedules and confirmations. It is a separate documentation example, not proof of the historical swap. Its close-out provisions and definitions show that termination can create a payment, with direction depending on the amount and circumstances. The blank template supplies no personal tariff or executed date. Sources: CIMB
Maybank’s own overview describes an Islamic cross-currency swap involving streams of profit payments in two currencies. Do not infer that every “currency swap” has the same cash flows as the FX sequence above. Sources: MAY
- Request one dated quote stating both currency amounts, settlement dates and the rate convention. A spread can be embedded in the quoted rate; “no separate fee” is not a complete comparison.
- Ask which service, brokerage, documentation, tax or funding costs apply and where they are disclosed. BNM’s services-contract provision permits a service fee; it does not specify your amount. BNM18, 17.4
- Identify who buys and owns any commodity, when possession occurs, and which obligation survives resale. Request transaction evidence rather than treating a diagram as proof of execution.
- Request the actual schedule and confirmations, cancellation and close-out formula, unpaid amounts and any collateral terms. Check the effect of changing the invoice date or amount.
- Keep product access separate from religious assessment. Muslim and non-Muslim readers can use this record, but no personal provider eligibility is established here. Check customer category, approval requirements and applicable foreign-exchange rules in the current offer.
Three common misunderstandings
Text extracted from the original examples contains differing dollar amounts that could not be reconciled here. The PDF diagrams could not be visually checked. This record therefore uses a qualitative sequence and separate invented invoice arithmetic. No original statistical claim about how much derivative activity is speculation is reproduced. Sources: FX09
| Claim you might hear | What to check instead |
|---|---|
| “A hedge guarantees no loss.” | Which risk and amount does it cover? Costs, a cancelled underlying payment and failure by the other party need separate assessment. |
| “A promise is already a currency sale.” | Identify the undertaking and the exchange contract, their dates and when the currencies become accessible. |
| “The paper proves this offer is approved.” | Match the actual contract version, intended use and documented review. Historical research is not a customer approval. |
Read next
These are proposed related-guide routes. For the recovered source, use the external original link below.
- G05: Riba, gharar and maysir without the jargon — understand the different contract questions.
- G07: Who checks Shariah compliance in Malaysia? — distinguish research, rules and product review.
References
All sources accessed or locally inspected on 6 October 2026. Publication, posting, issue, effective and execution dates are kept separate. Original PDFs are linked externally.
- FX09 — Shariah Parameters on Islamic Foreign Exchange Swap as Hedging Mechanism in Islamic Finance. Author: Asyraf Wajdi Dusuki. Conference paper, University of Leicester, 2–3 July 2009; 25 pages. See pp.8–13 and 17–21. Specialist-hosted original; no live product approval. PDF visual extraction was unavailable.
- CAT09 — IEFpedia citation to historical ISRA article 361. Catalogue posting: 21 October 2009; links old ISRA article 361. Read from the locally saved catalogue retrieval dated 6 October 2026; fresh page reopening failed. Posting is not the paper date.
- J09 — Journal metadata, BIM-717750. Lists ISRA International Journal of Islamic Finance 1(1), 77–99, with 31 December 2009 as publication date. Secondary metadata; journal-original text and exact revision relationship remain unverified.
- BNM18 — Bai` al-Sarf (Currency Exchange), policy document. Issued 11 April 2018. Effective 1 April 2019, except paragraph 25 effective upon issue. See 4.1, 14.1–14.9, 16.1–16.4 and 17.4; retrieved through BNM’s current register.
- CIMB — FX-i / FXOP-i / FXSF-i Master Agreement. Public blank template, with no executed date or customer schedule. Preamble and section 1 define its scope; section 9 and definitions cover close-out. This is a separate documentation example.
- MAY — Maybank Islamic: Hedging. Undated provider overview checked 6 October 2026. Its Islamic cross-currency swap description concerns profit-payment streams in two currencies; no personalised terms recovered.