The corpus already carries the OIC Fiqh Academy's GENERAL test for a halal hedge (Res 224).
The corpus already carries the OIC Fiqh Academy's GENERAL test for a halal hedge (Res 224). This is the Academy's OWN worked answer-key to that test: Resolution No. 238 (9/24) 'Hedging Transactions in Islamic Financial Institutions' (24th session, Dubai, United Arab Emirates, 4-6 November 2019). Where Res 224 refused to name a single product and only laid down the eight-point test, Res 238 — one session later — names the actual formulas and rules each one, splitting them into the hedges an Islamic institution may use, the hedges it may not, and the derivative look-alikes. It opens by 'confirming the resolutions of the Academy concerning hedging in financial transactions; in particular, resolution no. 224 (8/23)', then works through the list. This is the text a reader should hold against any 'Shariah-compliant hedge' an institution actually offers.
What this source says
FROM THE TEST TO THE ANSWER KEY. The Academy's Resolution No. 224 (8/23) did the disciplined thing and refused to bless or ban 'hedging' as a word: it set out an eight-point test and told institutions that 'Every formula requires detailed research'. One session later, in Dubai, the Academy took the next step and worked the test on the formulas Islamic institutions actually use. Resolution No. 238 (9/24) opens by 'confirming the resolutions of the Academy concerning hedging in financial transactions; in particular, resolution no. 224 (8/23)', re-listing its five paragraphs (Concept of hedging, Concept of risk, Concept of protection, the Shariah position towards risk hedging, and the Shariah rules for hedging formulas). Then it does what 224 withheld: it names names.
THE HEDGES YOU MAY USE. The resolution's second head lists the transactions that 'can generally serve as a basis for hedging and protection formulas' and that are 'in actual practice in financial institutions and they are permissible under Shariah'. There are several. ECONOMIC HEDGING — holding a diversity of assets and investment portfolios — is not a contract trick at all but plain prudence: it 'is required, according to Shariah, in order to achieve good resources management.' COOPERATIVE HEDGING is takaful: buying cooperative-insurance cover for the losses an institution may face, which the resolution says 'is not objected by Shariah due to the lawfulness of cooperative insurance on projects and physical and financial assets' (it points to the Academy's own rulings on cooperative insurance). PARALLEL CONTRACTUAL HEDGING is the salam-and-parallel-salam / istiṣnāʿ-and-parallel-istiṣnāʿ pattern — 'undertaking a contract parallel to the original contract, with the same terms and specifications, whereby the financial institution protects itself against the risks of the original contract' — with one non-negotiable rule: the two contracts must stay separate, 'each contract should remain independent from the other in all its rights and commitments.' COMBINED CONTRACTS place two permissible contracts side by side — murābaḥah with mushārakah, ijārah with mushārakah, murābaḥah with bayʿ al-ʿurbūn — 'by ways of making the contract side by side, neither as a necessary condition nor incorporating one contract within another.' And the institution may hedge a client's default with khiyār al-sharṭ (conditional options), and may protect invested capital through the guarantee modes the Academy has already permitted (an independent third-party donated guarantee per its resolution on muqāraḍah bonds; the burden-of-proof rule for a muḍārib per its resolution no. 212 (8/22)).
THE HEDGES YOU MAY NOT. The third head is the mirror image, and it is where the everyday 'FX hedge' usually falls. Hedging exchange-rate exposure through 'conditional mutual loans in two different currencies' — I lend you a surplus currency on condition you lend me the currency I need — is out: 'It is a kind of lending a loan against getting another loan, which is not permissible in Shariah, based on a consensus of all fiqh schools', because it ties two loans together (give me a loan and I give you one back). The resolution then lists the ṣukūk-prospectus devices that dress a fixed return as a hedge and are incompatible with Shariah — beginning with 'Guaranteeing the nominal value by the issuer' — and grounds their prohibition in the Academy's earlier rulings, including no. 188 (3/20) on the pursuit of research on Islamic ṣukūk.
THE DERIVATIVE LOOK-ALIKES, TYPED. The fourth head takes 'Alternative hedging instruments for financial derivatives and their Shariah rulings' and reports that 'These instruments can be divided into three essential types'. TYPE I hedges future exchange-rate moves through binding mutual commitments to enter a currency exchange later at a pre-agreed rate: 'It is not permissible to utilize the binding mutual commitment as a hedging mode for currency exchange contracts', because the Academy's currency ruling already held that 'it is not permissible to sell currencies on deferred payment' and a binding mutual promise is treated as the sale itself. TYPE II covers two-sided mutual commitments and, in its sharpest example, the 'Execution of mutual tawaruq transactions' engineered to swap a fixed rate for a floating one — 'It is not permissible because the transaction is based on a mode prohibited by Shariah (tawaruq)'. TYPE III is the one-party binding commitment sold as a stand-in for an option, and the ruling is a single line: 'It is not permissible to pay for a binding commitment.'
HOW IT CLOSES. Like Res 224, this resolution ends in a Recommendations section rather than a product catalogue. It asks Shariah boards, scholars and product designers to reconcile the fundamental objectives of the Shariah with the specific rules of each contract when structuring Islamic financial products and to weigh the outcomes of those contracts; and it asks institutions and policymakers 'to avoid sinking in debts which negatively affects economic activity in general.' It signs off, as these resolutions do, 'Indeed, Allāh is All-Knowing.'
HOW TO CITE IT HONESTLY. Res 238 is SETTLED, not a deferral: it 'Resolves', it confirms Res 224, and it rules formula by formula across four heads. It is CONFINED in the same sense as 224 and 178 — it carries a forward-looking Recommendations section — but the subject is decided in the body, not postponed. It grades no company, blesses no branded product, and sets no figure, rate or fee; a reader shown an 'Islamic FX forward' or a 'Shariah profit-rate swap' with a certified counterparty is not being shown this text — they are being shown a product this text tells them how to interrogate. What Res 238 adds to a riba-free life is the worked list: the handful of hedges the Academy actually clears (diversification, takaful, parallel salam/istiṣnāʿ kept independent, combined permissible contracts, conditional options, permitted guarantees) and the recurring shapes it rejects (loan-for-loan currency swaps, ṣukūk capital guarantees, and the three derivative look-alikes).
Wording inside quotation marks is quoted from the source. The rest is this notebook’s summary of it — read the original before relying on it.
Provenance
- Compiled from
- Compiled 2026-07-20 from the International Islamic Fiqh Academy's OWN OFFICIAL ENGLISH text of the resolution. PRIMARY AND SOLE AUTHORITY FOR EVERY VERBATIM SPAN: the Academy's OFFICIAL ENGLISH EDITION, 'Resolutions and Recommendations of the International Islamic Fiqh Academy' (official edition, October 2021, published by the Academy at iifa-aifi.org), which prints the ruling as 'Resolution No. 238 (9/24) / Hedging Transactions in Islamic Financial Institutions' with the session line 'holding its 24th session in Dubai, United Arab Emirates, on 7-9 Rabīʿ al-Awwal 1440h (4-6 November 2019),'. A SECOND BLOCK is loaded ONLY as a settledness negative control and quoted only for its identifying line: Resolution No. 188 (3/20) 'Pursuit of Research on Islamic Ṣukūk' — the genuine whole-subject deferral of ṣukūk research that Res 238 ITSELF references by title, and whose own 'Resolves' postpones the subject for further study; the settledness gates must catch it while NOT firing on Res 238's mere title-reference to it. A span verified against the wrong block would be a fabrication, so the span table is keyed by block and the union is never used. Gate: build_res238.py; audit_res238.py re-extracts every quoted span from the finished JSON and re-verifies it against the source.
- Source
- PRIMARY TEXT (full title; session, city, country and dates; the two recitals; the 'Resolves' with its four heads — the confirmation of Res 224, the permissible hedging bases, the prohibited hedges, and the three-type classification of derivative alternatives — and the Recommendations section): International Islamic Fiqh Academy (OIC), 'Resolution No. 238 (9/24): Hedging Transactions in Islamic Financial Institutions', in 'Resolutions and Recommendations of the International Islamic Fiqh Academy', OFFICIAL ENGLISH EDITION, October 2021, published by the Academy at iifa-aifi.org — the SOLE authority for every verbatim span attributed to Resolution 238. SECOND BLOCK, loaded ONLY as a settledness negative control and quoted only for its identifying line: Resolution No. 188 (3/20) 'Pursuit of Research on Islamic Ṣukūk' (20th session, Algiers, 2012), same edition — a genuine whole-subject deferral (its 'Resolves' postpones the subject for further research) that BOTH settledness gates must catch, and which Res 238 itself references by title (so the paraphrase gate is refined not to fire on that title-reference while still catching Res 188's own deferral). NOT a two-independent-translation gold pairing and cannot be: the IRTI/IDB English edition covers 1985-2000 only and this is a November-2019 ruling (same constraint as Res 123/136/137/139/153/158/170/177/178/186/200/224). No live per-resolution page on iifa-aifi.org was confirmed for Res 238 this run, so none is cited and the url field points at the edition itself. VERIFICATION: build_res238.py hand-lists every quoted span and verifies each as an exact substring of the official-edition extraction under canonical normalisation, keyed by block; audit_res238.py re-extracts every quoted span from the FINISHED JSON on disk and re-verifies it against the source.
- School / basis
- Comparative fiqh al-muʿāmalāt (al-taḥawwuṭ — hedging in Islamic financial institutions, ruled formula by formula) with a PRIMARY OIC collective text. Resolution No. 238 (9/24), 24th session (Dubai, United Arab Emirates, 7-9 Rabīʿ al-Awwal 1440h / 4-6 November 2019). Operative shape: a 'Resolves' across FOUR ordinal heads — First (confirming Res 224 (8/23) and re-listing its five paragraphs); Second (the permissible bases for hedging in actual institutional practice — economic hedging via diversified assets and portfolios; cooperative hedging via takaful; parallel-contractual hedging via salam/parallel-salam and istiṣnāʿ/parallel-istiṣnāʿ, the two contracts kept independent; combined permissible contracts placed side by side, e.g. murābaḥah+mushārakah, ijārah+mushārakah, murābaḥah+bayʿ al-ʿurbūn; conditional options / khiyār al-sharṭ against client default; and permitted guarantee modes including a donated third-party guarantee and the muḍārib burden-of-proof rule per Res 212 (8/22)); Third (prohibited hedges — conditional mutual loans in two currencies, i.e. loan-for-loan, prohibited by consensus of the schools; and ṣukūk-prospectus devices that guarantee the nominal value, incompatible with the Academy's ṣukūk rulings including Res 188 (3/20)); Fourth (alternatives to financial derivatives, divided into three types — Type I future currency-exchange hedges via binding mutual commitments, ruled impermissible on the currency-sale rule of Res 102 (5/11); Type II two-sided commitments and mutual tawaruq, impermissible as built on tawaruq; Type III a one-party binding commitment sold as an option substitute, impermissible because paying for a binding commitment is not allowed, per Res 63 and Res 224). Closes with a Recommendations section (reconcile the maqāṣid with each contract's specific rules and weigh outcomes; balance commitments and debts against real wealth and economic activity). CONFINED (a Recommendations section is present) but SETTLED — the subject is decided in the body, not postponed; it is the session-24 companion that confirms and applies Res 224 (8/23). RELATION TO THE CORPUS: it is the applied, formula-naming counterpart to Res 224's general test, and it invokes cooperative-insurance rulings already in the corpus (Res 200). NO SCHOLAR, BOARD, VOTE COUNT OR MADHAB TALLY is claimed: the resolution names none, and none is inferred. NO SCRIPTURAL TEXT IS REPRODUCED: the preamble cites no verse or hadith by wording, grading or number; the closing formula is devotional, not a graded citation. The cross-references the resolution itself makes — to its resolutions no. 224 (8/23), 102 (5/11), 40 (2/5), 157 (17/6), 63, 30 (5/4), 212 (8/22), 188 (3/20) and the cooperative-insurance rulings — are reported as Res 238 states them; the content of those resolutions is not reproduced beyond that reference.
- Captured
- 2026-07-20
- Added
- 2026-07-20
- Trust
- Primary or near-primary source with a stable public URL.
Compiler’s note
Added 2026-07-20 (auto-run). The OIC Fiqh Academy's applied, SETTLED ruling on the hedging transactions Islamic financial institutions actually use — Res 238 (9/24), 24th session, Dubai, United Arab Emirates, 7-9 Rabīʿ al-Awwal 1440h (4-6 November 2019). It is the worked answer-key to the general test set one session earlier in Res 224 (8/23), which was added on the previous run and which named Res 238 as the natural next pairing. WHY THIS ONE. The previous run (Res 224) named Res 238 (9/24) as the leading next candidate — the session-24 companion that confirms Res 224 and adds the concrete formulas — and Res 212 (8/22) as a fallback. A re-check ON DISK confirmed Res 238 UNCOVERED (no content/articles/*resolution-238* file existed; the corpus held Res 224's general test but not the Academy's list of specific permissible/prohibited hedges) and SETTLED (its 'Resolves' rules the subject formula by formula across four heads and explicitly 'confirming ... resolution no. 224 (8/23)'; it is not a deferral). SUBSTANTIVE: it is a hold-a-product-against-it list — the handful of hedges the Academy clears and the recurring derivative shapes it rejects. THE THREE SETTLEDNESS GATES (the Res 200 finding) + A PARAPHRASE REFINEMENT. Res 200 established that a bare keyword pass is insufficient because deferral by paraphrase defeats it; Res 224 established that a keyword can also FALSE-POSITIVE on a transaction-type adjective ('deferred exchanges'). Res 238 raises the mirror problem for the PARAPHRASE gate: its body references the TITLE of Res 188 (3/20), 'the Pursuit of Research on Islamic Ṣukūk', so the naive paraphrase pattern for pursuit-of-research FALSE-POSITIVES — there those words are the name of another resolution being cited as authority, not a deferral of Res 238's own subject. The gate's pursuit-of-research branch was refined with a negative lookahead so it does NOT fire when immediately followed by the words on Islamic (the Res 188 title form), and the build PROVES the refined gate still catches Res 188's OWN deferral (via its postponement keyword and its forthcoming-research paraphrase) while leaving Res 238 with zero paraphrase matches. Res 238's only 'defer' token is 'deferred payment' in the currency-sale ruling — a transaction type, correctly excluded by the Res 224 keyword refinement. Res 188 (3/20) is the EXACT negative control: Res 238 = the settled ruling that USES the ṣukūk research, Res 188 = the genuine deferral OF that research, and Res 238 cites it by name — so the pairing is tight and both gates catch Res 188 while passing Res 238. CONFINED, STATED HONESTLY (like Res 224/178/200). Res 238 carries a Recommendations section (two items — reconcile the maqāṣid with each contract's specific rules and weigh outcomes; and balance commitments/debts against real wealth and economic activity, avoiding over-indebtedness). The subject IS ruled across four heads; the Recommendations look forward without re-opening the ruling. The gate ASSERTS the Recommendations section is PRESENT so a future edition that removed it would fail loudly. WHAT IT ADDS that the corpus did not already hold: the Academy's OWN worked list of institutional hedges, which Res 224 deliberately withheld. The entry surfaces (1) the permissible bases — economic hedging (diversification), cooperative hedging (takaful), parallel-contractual hedging (salam/parallel-salam and istiṣnāʿ/parallel-istiṣnāʿ kept independent), combined permissible contracts, conditional options against default, and permitted guarantee modes; (2) the prohibited hedges — conditional mutual loans in two currencies (loan-for-loan, prohibited by consensus) and ṣukūk-prospectus nominal-value guarantees; and (3) the three-type taxonomy of derivative look-alikes (future currency-exchange commitments, mutual/tawaruq commitments, and the one-party binding commitment sold as an option), each ruled impermissible. HONEST SCOPE, NOT FABRICATION. Every cross-reference (Res 224, 102, 40, 157, 63, 30, 212, 188, and the cooperative-insurance rulings) reports Res 238's OWN references; the content of those resolutions is not reproduced beyond the reference. No provider, scheme, jurisdiction, statute, rate or percentage is named. The permissible/prohibited lists are quoted or summarised from Res 238's own text, not asserted as independent rulings. The words 'interest rate' appear only inside the description of the PROHIBITED mutual-tawaruq mechanism the resolution rejects; no figure or rate is asserted. HYPHENS: uses the single evidence-resolved reader from build_res139.py; the quoted spans were chosen to avoid line-break hyphenation and page-number interruptions, and the build re-checks the reader. DROPPED per no-fab: no scholar, no board, no provider graded, no madhab tally, no vote count, no figure, no rate, no fee, no threshold, no statute, no regulator. NO SCRIPTURAL TEXT: the preamble names no verse or hadith by wording, grading or number, so none is reproduced; the closing formula 'Indeed, Allāh is All-Knowing.' is devotional, not a graded citation. GLOBAL-FIRST: a universal structural ruling on institutional hedging — no market-specific content, no currency figure, no jurisdiction, no AU baseline. The Shariah-compliant-hedge / Islamic-FX-forward framing describes a market shared by all four editions rather than privileging one. VERIFICATION: build_res238.py hand-lists every quoted span and verifies each as an exact substring of the official-edition extraction (keyed by block — a span verified against the wrong block would be a fabrication, so the union is never used), runs all three settledness gates with the refined paraphrase gate, proves the refinement still catches Res 188, and asserts the Recommendations section is present. audit_res238.py re-extracts every quoted span from the FINISHED JSON on disk and re-verifies it against the source, with a minimal allow-list of the compiler's own words. NEXT candidate for a future run: Res 212 (8/22) 'Bank Guarantee for Misinvestment of Clients Funds' (the mudarib's guarantee in investment accounts, referenced by Res 238's guarantee head and settled across several heads) IF still uncovered — verify its 'Resolves' and uncovered status on disk first. Or Res 157 (17/6) on binding mutual commitments and collusion to make contracts (cited by Res 238's Type I ruling). RUN ALL THREE SETTLEDNESS GATES, VERIFY 'Resolves' on disk AND confirm not already covered before writing it up. AVOID the whole-subject deferrals already logged (Res 122 (4/13), Res 124 (6/13), Res 187 (2/20), Res 188 (3/20)) and Res 237 (8/24) on electronic currencies.
Topics
hedginghedging-transactionshedging-formulasislamic-financial-institutionsrisk-managementrisk-protectioneconomic-hedgingcooperative-hedgingtakafulcooperative-insuranceparallel-contractsparallel-contractual-hedgingsalamparallel-salamistisnaparallel-istisnacombined-contractsmurabahahmusharakahijarahsukuk-al-ijarahbay-al-urbunearnest-moneykhiyar-al-shartconditional-optionsthird-party-guaranteecapital-guaranteeno-capital-guaranteemudaribburden-of-proofconditional-mutual-loanstwo-currency-loan-swaploan-for-loancurrency-exchangedeferred-paymentbinding-mutual-commitmentsmutual-promisestawarruqorganised-tawarruqfinancial-derivativesfuturesoptionsswapsprofit-rate-swapsukuksukuk-prospectusnominal-value-guaranteeribamaqasid-al-shariahresolution-224resolution-102resolution-63resolution-40resolution-157resolution-30resolution-212resolution-188resolution-200oic-fiqh-academyiifacollective-ijtihadprimary-textresolution-238
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