[Avodah] Currency and Bond Trading; Ribis and Shabbas Issues

[Micha Berger]

On Fri, Jan 23, 2009 at 04:15:55AM -0800, Harvey Benton wrote:
: A. Do currency (or bond) traders who buy, sell, structure, restructure,
: finance, etc.foreign and domestic currencies (or  bonds) run into problems
: of ribis?...

Is it exchange traded or OTC? If the exchange isn't Jewishly owned, there
wouldn't be an issur ribbis. So I think we can limit the discussion to
OTC (over the counter) trades.

Stocks are pretty much what a heter iska is trying to imitate. Dividends
are profit share, not ribbis.

OTC Bonds are only an issue if you own the company making the coupon
payments, and again you're selling to a given counterparty who is Jewish.
Structured products that have interest coupons (rather than profit-linked
cash flows) are more often OTC, and since you're grouping any incoming
interest and making a new interest payment, I can see them also posing
halachic issues. But assuming you owned the investment bank repackaging
the product.

I don't know if any of this would be lemaaseh, as Jewish to Jewish OTC
trades of anything fancy are rare. Are any firms of that kind of size
that they issue these kinds products held by a Jewish majority -- on
both sides of the trade?

I think Israeli bonds are the only real example, as RPTeitz noted.
However, I think the argument is stronger than the way you repeated his
words. It's not just unknown, there is a non-Jewish middle party. The
Bank of NY Mellon, the actual issuer, presumably does not have more
shares held by Jews than non-Jews.

:-)BBii!
-Micha

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Micha Berger             It is harder to eat the day before Yom Kippur
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