Islamic Finance and Sale of Commodities in Organized Market

International commodities trade involves various risks and the regulators have developed certain regulations, guidelines and contracts to ensure the smooth running of the system and the safety of all the stakeholders. Islamic Shariah does not permit many of these practices and Shariah scholars and standard setters like AAOIFI and IFSB issue guidelines from time to facilitate trading in a shariah compliant manner. This study has discussed, in detail, the relevant rulings issued to perform international commodity trade. It is observed that existing knowledge offers valuable guidance in respect of trade agreements and the respective roles and responsibilities of different stakeholders. However, we find that there is a need to devise new hedging instruments to mitigate risks involved in international trade. Standard setters should enhance their skills in order to provide stakeholders with better regulatory guidelines for smooth practicing of Islamic finance transactions