The Role of the Stock Exchange in an Islamic Economy

Dr. Metwally has made an attempt in his paper to show how stability could be brought in share prices in an Islamic economy. His main proposals are essentially two: 1. The Management Committee of the Stock Exchange (MC) should determine the maximum share price (MSP) for each company at intervals of no more than three months. The MSP should be equal to the company's average net worth per share. Shares would not be allowed to be traded at a higher price than the MSP, but they may be traded at a lower price. The complexities of determining the average net worth have not been discussed. 2. Shares should be allowed to be traded only within specified trading periods with a view to reduce the frequency of trading in the shares of a given company. Who will prescribe the trading periods has not been indicated; it may be assumed that this task will also be performed by the MC