CARBON TRADING: CAPITAL MARKET CHALLEENGES AND REGULATORY REFORMS FOR ISLAMIC FINANCE

The present research is a first attempt that envisages the place of Emission Trading in capital markets considering the introduction of Islamic financial industry. The paper highlights the facts and challenges in the way of regulation of capital markets and explores the potential areas for investment in Emission Trading. The methodology covers the review of conventional Emission Trading and finance, complexities of carbon trade presently taking place under the conventional system, and financial opportunities for Islamic investors. Product designing and regulatory issues are highlighted with reference to environmental issues and Shariah principles. The present model of Islamic financial products would be extended to Carbon Market.