Raising hands in prayer is not obligatory; rather, it is a sunnah (recommended act). This ruling applies to raising hands which happens on four occasions, at the beginning of the prayer when uttering takbirat al-ihram (the opening takbir), when going down to ruku’, when standing up straight after ruku’ and after finishing the first Tashahhud while standing up to start the third rak`ah.
Sheikh Sayyed Sabiq states in his well-known book, Fiqh Us-Sunnah: Many narrations have been recorded concerning this subject. Many scholars have chosen the following forms: the hands are raised to the shoulders with the fingertips parallel to the lobes of the ears. Says an-Nawawi, “This is how ash-Shafi`i combined the hadith (on this question), and the people found it to be good.” It is preferred that one extends the fingers while raising the hands. Abu Hurayrah said, “When the Prophet (peace and blessings be upon him) stood for prayer, he would raise his hands (with them being) open.” (Reported by the five hadith collectors except for Ibn Majah)