Short Sale via Wa'ad.
General description: Short seller sells security to exchange. Exchange promises to repurchase security. Exchange faces short-term long buyer who buys security from exchange and promises to resell to exchange at a later date.
Like a conventional (covered) short, the security which is shorted is identified by the short-seller (identified as "supplier" below). The long, ("user" below) is long a conventional security with one catch--he must sell (at market price) at some point in the future. The fact that this his purchase has a condition means he must be compensated for it, much as in the conventional framework.
Is this two transactions in one? Can we actually sell with a condition that we can repurchase the same back again? Wouldn't there be shariah-specific objections to this? Or is it a viable approach? The Shariah scholars at the SC and BNM believe so (see link). Note the necessity of the intermediary to make this work. (This would be VERY good in western finance--to track the shorts). What do you think?
SC's Islamic Capital Markets Quarterly Nov 2008, pp 2-4