In their most basic form, derivatives have an important commercial function in mitigating investor exposure to market fluctuations, reducing transaction costs and providing investors with accessibility to new markets. Playing a role in the Islamic finance sector under the headings of structured products, treasury products and risk management, derivatives are financial assets that derive their value from the performance of another underlying entity such as an asset, interest rate or index. However, despite their widespread use in the conventional industry they remain a divisive topic in Islamic finance A consensus of opinion among Sharia’a scholars regarding the validity of derivatives under the tenets of Islamic finance has yet to be reached. Traditional derivative contracts are often settled in cash following a reverse of the initial transaction. From an Islamic perspective this essentially means there is no genuine sale and as a direct result of this the transaction is void. Besides the lack of asset ownership at the time of sale, other areas of concern shared by Islamic scholars have centred on the excessive uncertainty or speculation associated with derivative transactions and the fact that they often reference assets that are not in existence at the time of entering the contract. In order to adhere to Sharia’a principles, derivative transactions should be provided in response to a genuine market need, pertain to the direct ownership of an underlying asset, avoid reference to non-existent assets at the point of contract execution and avoid any unnecessary risk or speculation. If these criteria are met with a view to creating an equitable system, such an approach could potentially be interpreted as being Sharia’a compliant.