A modern application of murabaha in which Islamic banks purchase shares upon request from clients and sells them on a murabaha basis to those clients. Essentially, stock-purchase murabaha is permissible provided that the underlying shares represent tangible assets of their respective joint stock companies. Moreover, banks should make payment directly to the brokers because in this type of murabaha the client should not be appointed as agent for purchasing the subject-matter (the shares).

The purchasing bank should take delivery of the shares (physically or constructively) after paying the price, in order for the resale transaction, on a murabaha basis, to be shari’a-compliant. If settlement is not in real time, the bank shall wait for transfer to take effect. Generally, transfer takes three business days (+3); within this period the market risk will be solely borne by the bank. Furthermore, the shares underlying the murabaha contract should not be of a company owned by the client or by the same parent company lest the transaction turns into a “buy-back” which is prohibited by shari’a.