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Islamic finance refers to the means by which corporations in the Muslim world, including banks and other lending institutions, raise capital in accordance with Sharia, or Islamic law. It also refers to the types of investments that are permissible under this form of law.
A unique form of socially responsible investment, Islam makes no division between the spiritual and the secular, hence its reach into the domain of financial matters. Because this sub-branch of finance is a burgeoning field, in this article we will offer an overview to serve as the basis of knowledge or for further study.
Although they have been mandated since the beginning of Islam in the seventh century, Islamic banking and finance have been formalized gradually since the late 1960s, coincident with and in response to tremendous oil wealth that fueled renewed interest in and demand for Sharia-compliant products and practice.
Central to Islamic banking and finance is an understanding of the importance of risk sharing as part of raising capital and the avoidance of “Riba” (usury) and “Gharar” (risk or uncertainty).
Islamic law views lending with interest payments as a relationship that favors the lender, who charges interest at the expense of the borrower. Because Islamic law views money as a measuring tool for value and not an asset in itself, it requires that one should not be able to receive income from money (for example, interest or anything that has the genus of money) alone. Deemed “Riba”, such practice is proscribed under Islamic law (haram, which means prohibited) as it is considered usurious and exploitative. By contrast, Islamic banking exists to further the socio-economic goals of Islam.
Accordingly, Sharia-compliant finance (halal, which means permitted) consists of profit banking in which the financial institution shares in the profit and loss of the enterprise it underwrites. Of equal importance is the concept of “Gharar”. Defined as risk or uncertainty, in a financial context it refers to the sale of items whose existence is not certain. Examples of “Gharar” would be forms of insurance, such as the purchase of premiums to insure against something that may or may not occur or derivatives used to hedge against possible outcomes.
The equity financing of companies is permissible, as long as those companies are not engaged in restricted types of business, such as the production of alcohol, pornography or weaponry, and only certain financial ratios meet specified guidelines.
While Islamic finance has roots in the past but there is resurgence in past 30 years. Though Islamic finance is different from the conventional finance but it has same objective of providing economic benefits to the society.
Islamic Finance Banking or Sharia Complaint finance is banking or financing activity that complies with Sharia (Islamic law) and its practical application through the development of Islamic economies.
Since under Islamic finance money is considered as only a mean of carrying out transactions any earning on the same in form of interest (“Riba”) is strictly prohibited.
Brokerage fee amount by transaction value 1.
Trade online and settle your trade to a CDIA or CommSec Margin Loan 2.
Trade online and settle into a bank account of your choice.
Share Trades over the Phone 3.
CommSec Share Packs online 4.
CommSec Share Packs over the phone 4.
Trades requiring settlement through a third party 6.
1 For GST rounding reasons, the final brokerage fee may vary from the stated or expected brokerage fee by a couple of cents.
4 Normal brokerage will apply when a stock acquired through CommSec Share Packs is subsequently sold.
5 Amount per share will be noted as brokerage on each confirmation issued. There will be no substitution should a stock have a trading halt placed on it.
6 Includes third party Margin Lending, and where the Commonwealth Bank exercises its rights under the loan Terms and Conditions.
Other fees may apply. Please see the CommSec Financial Services Guide.
Open a CommSec Share Trading Account.
Buy and sell shares using a CommSec Share Trading Account with our cash account - with it you can seamlessly settle trades, transact and earn interest.
Buy and sell shares using a CommSec Share Trading Account with your existing bank account.
Frequently asked questions.
Shares held with another broker.
For the transfer to be successful the name and address registered on your issuer holdings must match your CommSec account.
Your request will be completed within 72 hours.
Shares held with the share registry To transfer shares held with the share registry into your CommSec Trading Account you need to complete an Issuer Sponsored Holdings to CHESS Sponsorship Transfer Form.
Your request will be completed within approximately 48 to 72 hours of receipt.
When you have bought and sold shares on the same day and the next trading day, your payment may be partially or wholly offset. For more information refer to the New Client Guide.