Islamic Forex and Stock Transactions - Is it Permitted?
  • Question:

    Is it permissible to deal in Islamic Forex and stocks transactions?


    Assalamu Alaikum wa rahmatullahi wa Barakatuh

    Thank you for your question.

    It is permissible to deal in Forex and stocks transactions, provided all the Islamic guidelines of business and trade are upheld.

    Islamic jurists have outlined some of the key guidelines for dealing in stocks, shares, foreign exchange etc. as follows;

    • The primary purpose of the company’s involvement is in an islamically permissible trade. i.e. 50% or more of the company’s income should be from permissible avenues.
    • One must take complete possession of the assets, which means that if the price of the commodity, currency or shares increase or decrease, the owner will either profit or lose. This could manifest in various forms. Each market and trade will be determined accordingly.
    • One must assure that trading does not result in buying or selling cash for cash. If exchange occurs in the same currency or stock, then the company should have some non-liquid-able assets. Such as land, machinery, building structure etc. If the company only has liquid assets, then it may only be traded as face value.
    • One should dispose of any profit derived from interest-related sources during the trade.

    (For details, see: Fatāwa Dār al-’Ulūm Zakarīyya and Fatāwa Uthmānī)

    And Allah knows best.

    Answered by Shaykh Yusuf Badat
    Hadith of the Day Imam
    Imam of the Islamic Foundation of Toronto and Director of Mathabah Institute
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