Gharar and Maysir in Islamic Finance Structured Investment Products: The case of Commodity Murabahah in Malaysia

Islamic Finance is fundamentally rooted in the Quran and Hadith, which prohibit elements like gharar and maysir. Gharar means excessive uncertainty, while maysir refers to gambling or speculation. Maysir also can be associated to the game of pure chances which the winner will win everything and the loser will lose everything. This prohibition is to ensure fairness, transparency and justice in financial transactions. Nevertheless, the rise of Islamic finance products has increased concerns among consumers as to whether the products offered are truly free from prohibited elements and follow the real Islamic scripture. Therefore, the purpose of this study is to examine the concepts of gharar and maysir from both perspectives, which are from classical and contemporary scholarship and then to evaluate their potential presence and mitigation in one modern Malaysian Islamic financial product which specifically focused on Commodity Murabahah. By using qualitative and conceptual research approach, this study analyses the operational structure of Commodity Murabahah and Shariah governance mechanism in Malaysia. The findings show that while certain operational features may raise concerns regarding the uncertainties or speculations, the effective measures through Shariah governance, contractual clarity and regulatory oversight can help to ensure Shariah compliance is fully observed.

Gharar, Maysir, Islamic Finance, Commodity Murabahah

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