How sound is the statement that it is forbidden to grant leverage if it is agreed upon as a loan, but permissible if it is conditioned upon mortgaging the asset being traded, while it is impermissible for the trader to pay commissions on financing or overnighting trades?
Financial leverage is a loan from the trading platform, and it takes three forms: 1. Conditioning a fee for holding overnight positions (tahbeet al-safqah), which is prohibited usury (riba). The Islamic Fiqh Academy has issued a resolution prohibiting margin trading (or al-hamish) because of it. 2. Not conditioning a fee for holding overnight positions, but conditioning that the transaction must be carried out through the platform in exchange for a commission. This is prohibited because it combines a loan (salf) with a compensatory transaction (mu'awadah), and every loan that draws a benefit is usury (riba). 3. Providing financial leverage without conditioning overnight fees or requiring the transaction to be carried out through the platform. This form does not exist in practice.
Therefore, dealing with financial leverage is absolutely prohibited. A person should only trade with their own money and pay fees to the platform for executing the transaction.
Summarized from the full answer at Ftawy · reviewed Sep 2, 2026
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