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Islamic Finance


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Bay’ Al-Muzayadah


A transaction that involves the sale (bay’) of an asset in the open market based on the process of bidding amongst potential buyers. In this open bidding trading, the asset for sale will be awarded to the highest bidder, i.e., to whoever offers the highest price. In other words, it is a trading transaction based on an auction/tender. It usually involves the sale of a merchandize that is offered at the same time to more than a prospective buyer. The prospective buyers bid up the price either with or without the intention to buy. However, the highest bidder will be given the merchandize and will have to pay the highest-bid price.


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