When Issue’ Transaction

‘When Issue’ Transaction

When Issue is a promise made by both contracting parties (vendor and purchaser), in order to secure a transaction in debt securities, at a certain price, which will usually be issued approximately in a week. Although it is merely a promise, its relevant information would be recorded in the ‘Bond Information Dissemination System’, in order to ensure market transparency for all market participants. This When Issue arrangement is meant to help the participants to forecast an accurate price for bidding on the issuing date. The actual sale and purchase of the securities take place upon delivery of the securities and the price settlement, after the issuing date. Should the issuer cancel the issuance of the securities, the promise too will be automatically terminated. This raises a Shari’ah issue on the permissibility of a promise to sell and buy in future. Resolution The Council, in its 22nd meeting, held on 26th February 2002 / 13th Zulhijjah 1422, resolved that When Issue transactions in the Islamic securities market are permissible, based on the permissibility of promise to sell and promise to buy. Issuer: Shariah Advisory Council, Central Bank of Malaysia.