Shariah Screening Standards Compared: AAOIFI, S&P, Dow Jones, MSCI and FTSE

Ask four Shariah screeners whether a stock is compliant and you can get four different answers. That is rarely a mistake. Each index provider and standard-setter uses its own limits, and more importantly its own denominator. This guide puts AAOIFI, S&P, Dow Jones, MSCI and FTSE side by side so you can see where they agree, where they differ, and why a company can pass one and fail another.

What every standard has in common

All major Shariah screens work in two stages.

1. Business activity screen. Companies whose core business is impermissible are excluded outright: conventional banking and insurance, alcohol, pork, gambling, tobacco, adult entertainment and, for most providers, weapons. A small amount of incidental impermissible income is tolerated, usually up to 5% of total revenue.
2. Financial ratio screen. Companies that pass the business test are then checked for how much they rely on interest. Typically three things are measured: interest-bearing debt, cash and interest-bearing securities, and (for some providers) receivables or other liquid assets.

The disagreements are almost all in stage two.

The key difference: what the ratios are divided by

A ratio is only as meaningful as its denominator, and this is where the standards split into two camps.

• Market capitalisation. AAOIFI, S&P and Dow Jones divide by the company’s market value. AAOIFI uses current market capitalisation; S&P uses a 36-month average and Dow Jones a 24-month average, which smooths out short-term price swings.
• Total assets. MSCI (in its standard “A-series” indexes) and FTSE divide by total assets from the balance sheet, which does not move with the share price.

The practical effect is large. A highly valued technology company with modest debt looks very light on leverage when measured against market value, but the same debt can look much heavier against book assets. Conversely, when a share price falls sharply, a market-cap screen can push a company over the limit even though nothing on its balance sheet has changed.

Side-by-side comparison

Standard	Denominator	Debt limit	Cash & interest-bearing securities	Receivables / liquid assets	Impermissible income
AAOIFI Shariah Standard No. 21	Market capitalisation	below 30%	below 30%	Not a separate ratio	below 5% of revenue
S&P Shariah Indices	36-month average market cap	30% in the current methodology (33% in earlier versions)	30% (33% earlier)	Receivables below 49%	below 5% of revenue
Dow Jones Islamic Market	24-month average market cap	30% in the current methodology (33% in earlier versions)	30% (33% earlier)	Receivables test against average market cap	Business screen with revenue tolerance
MSCI Islamic (A-series)	Total assets	below 33.33%	below 33.33%	Receivables + cash below 33.33%	below 5% of revenue
FTSE Shariah	Total assets	below 33.333%	below 33.333%	Receivables + cash below 50%	below 5% of revenue (interest included)

Thresholds as published by each provider, last checked by Purindex on 1 November 2026. Providers revise their rules: S&P Dow Jones Indices lowered its debt and cash limits from 33% to 30% in 2026, and MSCI applies a lower 30% buffer to new index entrants. Always check the provider’s current methodology document before relying on a number.

Why a stock can pass one standard and fail another

Three situations explain most disagreements:

1. High valuation, moderate debt. Market-cap screens (AAOIFI, S&P, Dow Jones) are generous to companies trading at a large premium to book value. An asset-based screen (MSCI, FTSE) may flag the same company.
2. A recent share-price fall. AAOIFI’s current market cap reacts immediately. S&P’s 36-month and Dow Jones’s 24-month averages react slowly. Asset-based screens do not react at all.
3. Large cash piles. Cash-rich companies can fail the liquidity test, and the receivables-plus-cash tests used by MSCI and FTSE catch companies that AAOIFI does not measure in the same way.

Timing matters too. Index providers review their lists quarterly, so a status you read on an index factsheet reflects the last review date, not today’s balance sheet.

Which standard should you follow?

There is no single correct answer, and Purindex does not tell you which to choose. A few practical points help:

• AAOIFI is the standard most widely referenced by Islamic financial institutions and scholars, which is why Purindex uses it as its primary method.
• If you invest through a Shariah index fund or ETF, the fund follows the index provider’s rules (S&P, Dow Jones, MSCI or FTSE), so it helps to understand that provider’s screen.
• Being consistent matters more than picking the strictest rule for one stock and the most lenient for another.
• For a personal ruling, consult a qualified scholar.

How Purindex shows this

Each company page on Purindex shows its AAOIFI result first. Where we show other standards, they are Purindex calculations using each provider’s published thresholds, not official index membership. Our methodology page explains the data behind every result, and you can browse screened stocks here. For a deeper look at the AAOIFI ratios themselves, read Understanding AAOIFI Financial Ratios.

Frequently asked questions

Is MSCI stricter than AAOIFI?

Not always. MSCI’s 33.33% limit is numerically higher than AAOIFI’s 30%, but because MSCI divides by total assets rather than market value, it is often stricter for highly valued companies and more lenient for companies trading below book value.

Why does a stock’s status change when nothing happened at the company?

Under market-cap based screens, a fall in the share price raises every ratio. A company can move from compliant to non-compliant purely because the market re-priced it.

Do all standards require dividend purification?

Yes. Every major standard tolerates a small share of impermissible income only on the condition that investors give away the matching share of their returns. Our step-by-step purification guide shows how to calculate it.