Is it permissible to adopt the second opinion, which allows margin trading under specific conditions, when dealing with a brokerage firm that offers one-day financing without overnight fees, where the lender is a bank and the brokerage firm bears its interest, charging the client only its usual commission, with the possibility of immediate withdrawal of profits?
There is no harm for a layperson in following the of a scholar they trust, if they predominantly believe it aligns with Islamic law and their following is not based on whim. This is based on the Prophet, peace and blessings be upon him, who said: "Whoever gives a fatwa without knowledge... its sin is upon the one who gave the fatwa."
Borrowing from a financial intermediary is not permissible if the intermediary stipulates that the trading must be done through them, because this leads to usury. The loan is usurious between the bank and the intermediary company that pays the usurious interest, and the client is the cause of obtaining this forbidden loan.
The Islamic Fiqh Council has decided that margin trading is not permissible according to for the following reasons:
1. It includes explicit usury, represented by "overnight fees," which is an interest stipulated on the investor, based on the Almighty's saying: "O you who have believed, fear Allah and give up what remains [due to you] of usury."
2. The intermediary's stipulation that the client's trading must be through them leads to combining a loan and an exchange, which Islamic law has forbidden, as the Prophet, peace and blessings be upon him, said: "It is not permissible to combine a loan and a sale."
3. Trading in global markets involves forbidden contracts, such as trading in bonds and shares of companies whose purpose is forbidden or some of whose transactions are usurious, selling and buying currencies without a Sharia-compliant قبض (possession), trading in options and futures contracts, and the intermediary selling what they do not own.
4. Significant economic harms to traders and society, based on debts, risk-taking, and deception, which makes it a form of unjustly devouring wealth.
The Council recommended that financial institutions follow legitimate financing methods such as Sharia-compliant partnerships.
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