The price of the stock are determined by the law of
supply & demand . Sometimes because of various reasons supply and
demand of stock increases or decreases . This imbalanced situation may
have an input on the decision of the other stock holders and might cause
them to join the buyers or sellers of the stock . In most developed and
advanced stock markets of the other countries some kind of institutions
which are called market makers have been established in order prevent to
stock market from intense fluctuations and to stop the imbalance of the
market . These market makings by buying and selling stocks at times of
high supply and demand prevent unwise pricing of the stock and
therefore shall keep the price of the stock in an acceptable manner (
fair value ) , so that the stock could still be liquid and its
transactions could continue .
In our country, (IRAN), although the age of stock
market goes back to several decades , the lack of law and also
unsuitable infrastructure of the stock market has let some of the active
stock holder function in an unwritten manner ( so called market making)
. These methods not only prove functional outputs of the market making
, they may also be in contradiction with our Islamic laws and
regulations ( Islamic jurisprudence ) and may be considered as fraud or
unjust practice .This article shall focus on introducing so called
techniques of market making in Iran stock market and also would study
them from our religus standards and Islamic jurisprudence .
Key Words
stock exchange , market making , fraud