Compare Islamic Forex & CFD Brokers

Introduction – Why are normal Forex accounts not Sharia compliant (“Halal”)?

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 the borrowing costs for the two quoted currencies, though many brokerages add in an extra charge to cover the costs of financing a position overnight. It should be clear that the practice of charging overnight swaps would in breach of Sharia law and this is why standard Forex accounts aren’t strictly compliant with Islam.

 Best Trading Account for Practicing Muslims

Updated: Dec 23, 2016 – Tuesday, the 23th of Rabi’ al-awal, 1438 A.H.

etoro-logoshariah-law-forex

  • Rated at Top Provider on TheFXView.com (More Than 50 Brokers Tested)
  • Minimum Deposit: $1,000
  • Max Leverage:  1:400
  • Shariah Compliant 100% – No Swap Fees – Deals with thousands of Muslim Clients
  • Regulated: By CySec (Europe), FCA (UK), ASIC (Australia, Asia Pacific)
  • Largest Selection of Instruments – Stocks, Indices, Commodities, Currencies and Crypto Currencies
  • Good Spreads - From 2 Pips and No Swap Fees (Interest) for Muslims
  • Has an Extensive Social Trading Platform – With Thousands of Successful Traders to Copy

Open a Demo or Real Account – Click Here 

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Additional Muslim Forex Account Providers:

BrokerMin. DepositMarketsTypical EUR/USD Spread (Pips)*LeverageIslamic AccountsReview
XM.com $5FX & Equity, Indice, Precious Metal and Commodity CFD’s1.9888:1Yes, on requestHere
ForexTime$0FX & Equity, Indice, Precious Metal, ETF and Commodity CFD’s1.1 (ECN)1000:1YesHere
Markets.com$100FX & Equity, Indice, Precious Metal, Bitcoin and Commodity CFD’s2.3 Floating & 3 Fixed 200:1Yes, on requestHere
FxNet$5FX & Metal and Stock CFD’s2.8500:1YesHere
Plus500$100(CFD Broker)2200:1NoHere
AvaTrade$1FX & Commodity, Stock, Bitcoin, Indice & Bond CFD’s3400:1Yes, on requestHere
Saxo MT4$0FX & Commodity and Indice CFD’s2200:1NoHere
Barclays Margin FX$0FX2.1100:1NoHere
Dukascopy$5000FX & Spot Metals0.5100:1Yes, on requestHere
AAAFx$300FX & Indices and Commodity CFD’s1.9200:1NoHere
easy forex$100FX & Commodity CFD’s3200:1Yes, on requestHere
EC Markets$100FX & Stock, Indice & Commodity CFD’s3 200:1Yes, on requestHere
Finexo$100FX & Stock, Indice & Commodity CFD’s 3 200:1Yes, on requestHere
HotForex$50FX & Stock, Indice & Commodity CFD’s1.51000:1Yes, on requestHere
ForexYard$100FX & Equity, Indice, Precious Metal, and Commodity CFD’s2.2200:1Yes, on requestHere
UFX Markets$100FX & Equity, Indice, Precious Metal, and Commodity CFD’s3200:1Yes, on requestHere
FXCC$100FX & Precious Metals and Commodity CFD’s2300:1NoHere
Vantage FX$100FX, Binary Options & Commodities and Indice CFD’s2500:1NoHere

 

What is an ‘Islamic’ account?

Islamic (or Sharia, Halal, Muslim) accounts are special accounts designated for those unwilling to pay/receive daily interest fees as a result of their trading activity. Islamic accounts also do not pay interest on the funds deposited with the FX broker (as some FX brokers bow offer bonuses including account balance top-ups simply for maintaining funds in your trading account).

Why are Islamic accounts offered?

Islamic accounts are exactly the same as regular FX trading accounts minus the interest fees/payments. 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 eligibility

FX 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.

Are Halal accounts new?

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.

Why are normal Forex accounts not Sharia compliant (“Halal”)?

Standard Forex trading accounts tend not to be Sharia compliant due to the practice of charging overnight swaps. It is a staple of the FX market, to see overnight swap rates charged on all trades done.

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 the borrowing costs for the two quoted currencies, though many brokerages add in an extra charge to cover the costs of financing a position overnight. It should be clear that the practice of charging overnight swaps is in breach of Sharia law and this is why standard Forex accounts aren’t strictly compliant with Islamic practises.

This is easily remedied simply by contacting your broker and finding out the details. Do be careful about the exact Terms and Conditions, because some brokers often levy exorbitant fees as a means of recouping the lost/gained interest charges which tend to be negative for most tradable currency pairs.

Here is an example of how a prominent FX broker addresses the issue of Islamic accounts — simply adding a ‘fee’ to all transactions and changing the terminology from ‘interest’ to ‘fee’:

The “Fee” will be charged to the account per round-turn lot, regardless of whether the position would have been subject to rollover fees. In addition, please be advised that any and all accounts in the name of, or associated with, the account holder(s), will be subject to this agreement. Any abuse of this form shall render it void, and the said account(s) will become subject to being charged the greater of fees charged for all lots traded, or rollover fees that would have been charged to the account. “Fees” on all account types are subject to change at any time. The Company reserves the right to change the “Fee” or to revoke the interest-free option on the account in its sole discretion at any time. Certain currency pairs and/or trading styles may be subject to higher commissions and, therefore, may be charged these commissions retroactively. Corporate accounts are not eligible for the interest-free option.More Information

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. Some brokerages will simply waive the overnight swaps without labelling the account ‘Islamic’. 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.  Alternatively, some Forex brokerages offer Islamic accounts where there are no overnight swaps, but where the brokerage takes a share of customer’s profits again in order to make up for 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.

Our Best Muslim Accounts Forex Broker Selection

The brokers featured as the top broker for Muslim traders are also the ones receiving the highest score on our tests. 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.

 

 

2 thoughts on “Islamic Forex Accounts

  1. Hi,
    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?
    Kind Regards
    Feroz

    1. Hi Feroz. I don’t think there’s a Shariah Advisory Board supervising over this topic.
      As far as we know things are pretty straightforward and Shariah Compliant Trading has never been posed an issue.

      Re: trading – if you consider using professional traders that will trade on your behalf, we advise you to use social trading platforms like eToro or Zulutrade where you can automate your trading without the risk of being scammed by your so-called dedicated broker.

      Regards

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