I decided to leave online trading while listining Dr. Zakir Naik vidio available on youtube and this; Praise be to Allaah. After listening to the research that has been submitted and the detailed discussion on this topic, the opinion of the council is that this transaction involves the following: This is interest that is charged to the purchaser if he does not make a decision on the same day, and which may be a percentage of the loan or a set amount.
This is a kind of haraam riba. Allaah says interpretation of the meaning: Fear Allaah and give up what remains due to you from Ribaa from now onward if you are really believers. And if you do not do it, then take a notice of war from Allaah and His Messenger but if you repent, you shall have your capital sums.
This was stated in a resolution of the Islamic Fiqh Council in Jeddah, no. The fourth statement of the Islamic Fiqh Council of the Muslim World League in its fourteenth session in AH stated that it is haraam to deal in the shares of companies whose main purposes are haraam, or some of their dealings involve riba. A resolution of the Islamic Fiqh Council in Jeddah no. The same applies to futures and trading in indexes.
This transaction involves economic harm to the parties involved, especially the customer investor , and to the economy of the society in general, because it is based on borrowing to excess and taking risks.
Such matters usually involve cheating, misleading people, rumours, hoarding, artificial inflation of prices and rapid and strong fluctuation of prices, with the aim of getting rich quickly and acquiring the savings of others in unlawful ways. And Allaah is the Source of strength. May Allaah send blessings and peace upon our Prophet Muhammad and all his family and companions. We ask Allaah to guide us and you.
And Allaah knows best. The trading that I will be doing will be as follows: The broker will not charge any interest on the money that he invested or lend, because it will be a Shariah compliant account. The broker will take a small share of the profit and rest is given to me - If the rate of the euro goes down below a certain margin which is determined by the amount I invest, my broker will close the trade and take his money back and I will lose the money I invested.
Also, another place were interest may be involved is when the buying and selling is not done on the same day, then a rollover occurs which mean that either we have to pay interest or give interest on the currency you have bought, but the brokers is offering a swap free or interest free accounts for Muslims only, in which, even if you do not close the trade on the same day, they will not debit or credit any interest.
I am interested in Spot trading not Future trading. Please let me know if this type of trading is halal. Trading in this manner appears to be objectionable from a Sharia perspective and must be avoided.
From your explanation, the contribution of the broker appears to be a loan. If this is the case and you make a profit when selling the currency, the broker is not entitled to any amount over and above his capital loan. Any amount that he takes over this is deemed to be interest.
On the other hand, if the contribution of the broker is deemed to be a capital contribution as a partner in the venture, then both partners must share in the loss as well, whereas, apparently, from your explanation, it appears as though the broker does not share in the loss. His capital is guaranteed. Similarly, conventional forward exchange contracts and purchasing or selling of currencies on the futures market is also prohibited.
A method of trading can be structured on the principles of musharaka partnership. I suggest that you refer to the book An Introduction to Islamic Finance and thereafter, should you and your broker require any assistance and advice regarding how to structure such a partnership, you may contact us and we will endeavor to advise to the best of our ability.
Further, the Sharia has laid down certain guidelines and regulations when trading in currencies. It is necessary to uphold and maintain these regulations when trading in currencies.
The most important of these regulations is that currencies of different countries can be traded in exchange of each other provided that the transaction is completed on spot i. In other words both the counter-values are exchanged at one and the same time. The exchange of both counter values and the subsequent possession acquired by the buyer and seller thereof, could take place through actual possession or constructive possession which is also acceptable.
Physical possession takes place by means of simultaneous delivery by hand. Among other forms of constructive possession that are approved by both Shari'a and business are the following: In following such a procedure, the institution shall adhere to the principles of Islamic law regarding currency exchange.
A delay in making the transfer is allowed to the institution, consistent with the practice whereby a payee may obtain actual receipt according to prevailing business practice in currency markets.
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