Islamic account

[red1dregon]

To understand its meaning you can read how its described by one broker


MoneyForex offers the possibility of Islamic or swap-free accounts with no rollover charges. Swaps or roll over charges will not apply to such accounts. For this service MoneyForex offers one pip spread higher on all currencies per trade.

MoneyForex offers all clients the opportunity to maintain islamic trading accounts (swap free forex trading accounts) whereby no roll over interest will be charged or incurred to positions held overnight which is in compliance of the Islamic Shariah Law. A small fee of $8 dollar per standard lot is charge daily for positions held overnight. Traders can hold the positions for unlimited time.

In order to maintain an Islamic (swap free) Forex trading account a Request For Islamic (Swap Free) Forex Trading Account has to be filled & signed by the client and sent to us by Fax or e-mail to admin@moneyforex.com. MoneyForex offers Islamic (swap free) Forex trading account to all clients no matter what their religion. Clients can open the account in any of the available currencies base.

[Thomas]

Islamic accounts was/are used in carry trading! The trader buys a currency pair that gives a positive rollover in a normal account and in the same time sell the same pair in an Islamic account where the trader don´t pay rollover. The movement in the currency pair is alligned between the accounts and the trader earns the rollover collected in the normal account. I don´t think it´s legal anymore, but if any members of the forum has any experiences with the subject I´m interesting to know more.

[Simon]

Interest (usury) is specifically prohibited in Islam.

This means that all Islamic banking uses something called "profit rate" instead of interest. Effectively, a pre-agreed rate is implemented and the borrower pays that back - so you are correct Capsmart. The difference is that, if you fall behind on your payments, you will never be charged more than the total amount agreed at the beginning.

I don't want to get to much involved in Islamic banking in this thread - it is quite complex unless you have lived in a Muslim country, I would suspect. But it is interesting and I personally see a lot in it that is preferable to Western banking. You can read more about it here - Islamic banking - Wikipedia, the free encyclopedia

When trading Forex, Islamic accounts are swap free - you cannot profit or lose out on the difference between the interest rates of different currencies as you would on a normal account.

Forex trading is a very popular pursuit in the Middle East, so there are a wide variety of brokers that offer Islamic swap-free trading. Tadawul is probably the best known but there is a list of others here - Muslim Forex Brokers, Islamic Forex Brokers, Muslim Forex

(Tadawul is Arabic for"exchange" and is also the name of the Saudi Arabian stock market).

The only other thing that Muslim traders should consider in order to make halal investments is that (to the best of my knowledge) spread betting is haram due to the fact that you aren't buying the underlying commodity - so it really is like betting as opposed to trading. I can't find a fatwa on that though, so don't quote me!