Standard Forex trading accounts tend not to be Sharia compliant due to the practice of charging overnight swaps. Forex accounts either receive or are charged a fixed rate of interest when a trader holds a position overnight. Whether an account receives or is charged a rate of interest depends on pelaburan forex halal sharia borrowing costs for the two quoted currencies, though many brokerages add in an extra charge to cover the costs of financing a position overnight.
Rated at Top Provider on TheFXView. The reason behind this prohibition is the belief that Muslims should give for the sake of giving and not in order to get something in return. According to Islamic Law, it is forbidden to take or give interest of any kind and Islamic Forex accounts were designed with this in mind. Islamic account eligibilityFX brokers will offer Islamic accounts and some will ask for some evidence of the client being a Muslim. However, given that religious beliefs are a personal thing, and not a bureaucratic signpost, most brokers simply take the clients word for it. As part of the Terms and Conditions, FX brokers tend to stipulate that any abuse of this zero-interest provision will be immediately remedies and appropriate charges reinstated in full. Also, it is worth mentioning that although FX brokers waive the interest charges for clients — they must still pay interest charges themselves to their liquidity providers who will not offer Islamic accounts.
Apart from being a messy exercise, these costs are passed onto Islamic account holders via wider spreads, higher commissions or flat service fee charges added to their trading statement at the end of the month. Unfortunately, in the land of financial services, everyone pays the pied piper, including those of the Muslim faith. Zero-interest trading accounts are nothing new and brokers have been offering this type of service for years. As increasingly more people have engaged in trading at the retail level, Muslim accounts have been something people have asked for. Brokers have responded by providing accounts that suit the requirements of Muslims and continue to offer these accounts on a regular basis upon request.
It is a staple of the FX market, to see overnight swap rates charged on all trades done. This is easily remedied simply by contacting your broker and finding out the details. Note the complete lack of availability of Islamic accounts for corporate entities — Islamic accounts are an entirely retail-market phenomenon especially created to attract clientele. Typically, brokerages will waive various fees including interest, if a client has deposited a significant sum of money with the firm and is trading actively. This is why Islamic accounts often require traders to deposit a significant sum of money. In some cases brokerages will waive the overnight charges but charge Islamic accounts a slightly wider spread in order to make up for the lost overnight swap fees.
Islamic trading accounts are becoming increasingly popular not only with practicing Muslims but with those who want to hold positions for a significant period of time without occurring overnight costs. We have independently reviewed over 50 forex, CFD, and social trading brokers, and made sure we will report the most credible companies to invest with. I would like more info regarding your shariah compliant trading. Do investors trade individually or are there professional traders that trade on their behalf? Also please advise,Are their any shariah board advisory that oversees Islamic Trading? I don’t think there’s a Shariah Advisory Board supervising over this topic.