Islamic Trading and Brokerage

On May 22, 2015, in Industry news, by Webmaster

Hikmah Capital Corp. CEO Mr. Suhail Ahmad special report on Islamic Trading and Brokerage Published in the Islamic Finance News on May 20th, 2015

Islamic trading accounts are a specific category of investment trading accounts that follow Shariah (Islamic law) to meet the needs of Muslim investors. Many banks and brokerages in the Middle East offer Islamic stock trading accounts and it is a relatively straightforward brokerage service that does not pay or charge interest on the cash funds in the account.

Forex trading, let alone the validity of forex Islamic accounts, remains an area of contention among Islamic scholars. Several Fatwas (or rulings) have been issued over this matt er and the majority of Shariah scholars agree with the following generally-accepted guidelines for forex trading:

• There must be an immediate (spot) buying and selling of currencies without delay.

• Currencies need to be transferred from the account of the seller to that of the buyer and vice versa (so actual exchange).

• The cost of the trade should be paid without delay and not in installments.

• No interest is paid or earned on the currency trade or cash held in currency accounts.

However, one of the biggest issues of forex trading is not the issue of Riba or interest but that of Gharar (uncertainty) and speculation. Gharar in Islamic finance is a risky or hazardous sale,
where details concerning the sale item are unknown or uncertain. Gharar is prohibited under Islam, which explicitly forbids trades that are considered to have excessive risk due to uncertainty.

Download the Islamic trading and brokerage article in PDF format courtesy of Islamic Finance News.

 

 

 

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