their principal, this is the case with manymortgage bonds.Bond market comprises of primary market and secondary market.The primary bond market is where the bonds are initially issued, while thesecondary market where the bonds areresold to other investors. Islamic bondsare also having primary and secondarymarkets. The main difference, however,is the way the bonds are issued andtraded afterwards. In the process of Islamic bond issuance bay’ al-‘Inah isused to securitize the instrument in the primary market, while in the secondarymarket, bay’ al-Dain is used in order tolegalize reselling of the bonds. Such process is mostly used in the Malaysianmarket, while most of the Middle-Eastern countries do not accept it. The proposed alternative is Islamic bonds based on Muqaradah.
: A financial market inwhich new issues of a security, such as a bond or a stock, are sold to initial buyers by the corporation or governmentagency borrowing the funds. Theinvestment bank underwrites securitiesand then sells them to the public.
: A financial market inwhich securities, that have been previously issued, can be resold. It could be an organized market, such as KLSE,or over-the counter (OTC) market inwhich dealers at different locations standready to buy or sell securities over thecounter to whoever accepts their price.Bonds generally can be tradedanywhere in the world as long as a buyer and a dealer can strike a deal. There isno central place or exchange for bondtrading, as there is for publicly tradedstocks. The bond market is known as an“over-the-counter” market, rather thanan exchange market. There are someexceptions to this however. For example,some corporate bonds in the UnitedStates are listed on the exchange. Also, bond futures and some type of bondoptions are traded on exchanges. But themajority of the bonds do not trade onexchanges.
: While investors can trademarketable funds among themselveswhenever they want, trading is usually