Could you advise on the permissibility of CFD, ETF - not owning the underlying asset/ owning of contract.
In this instance, platform etoro seem to sell Ada Cardano as underlying asset and store in cold storage, however purchasers are unable to move to personal wallet - seeming it to be a cfd or contract.
Could you advise if you purchase on premise you are buying underlying and it transpires you are buying a contract is permissible.
And if buying cfd/ contract direct would be ok also.
Wa alaykum salaam,
CFDs and any instrument which do not give you ownership of the underlying asset are not Shariah compliant.
I would advise against investing in such areas without a Shariah certificate or a thorough review of what is actually happening.
Dear mufti in eToro there is some shares before you buy you see word you are buying the underling asset and another like ada CFD in such case is that mean when you buy underling asset you own it ?
Also what about interactive broker and eToro even when we buy but actually we are not the owner our name not in nasdaq but in their plattform they give as dividend and rights of having the stock is this halal or not do I need to open direct account under my name in market through out broker there not online broker ?
Dear mufti Faraz
May you replay of what I have writien jzak Allah ker
Same question.why is it not halal if we allow them to be owners on our behalf and we are ok to not withdrawing the asset?if asset is real and is held why are they saying we dont have ownership?they are owners on our behalf we have contract we can sell and convert it back to usd whenever we want.i want proper question why is this thing not shariah complaint?its like i am making them my lawyer basically to purchase the asset on my behalf and hold it and sell it when i want.i hope @Mufti_Faraz_Adam Can clarify this topic in detail.Because so far no one explains this i have searched throughout the internet.for some reason they avoid explaining this exact thing.
Because in other words u would be saying that we can not make anyone lawyer or basically shariah prohibits it for have someone else trade or hold assets on our behalf if we are ok and dont want to withdraw the assets.that is what i suppose u mean.but u did not clarify it.u keep saying we dont own the asset true we dont have the actual asset.but its like i send a guy who actually got the asset and he holds it on my behalf by making purchases and sales in the market ( of course market owners may seem he’s buying or holding etc but its me who sent him ) and when i want to withdraw i tell him to sell the asset and then he sends me back my dollar with any profit or loss there is clear ownership of asset here he has asset on hand and its spot exchange hand to hand.how is this model not halal someone should do a proper explanation rather then say cfd dont give ownership,because they actually do and u can withdraw just need to sell the asset and he can do that on ur behalf and i explained this model in detail.for me it seems to me he’s like my lawyer in this case and when i withdraw i get back money in usd what is wrong with that?why no mufti really explains this topic in detail but always say no ownership,its betting etc etc bro how in the world is this betting?Its Spot transaction.Only he is doing it and i dont have the asset but he does thats what it is now i hope this clarifies what cfds ( or modern cfds at least ) actually are that most good brokers provide.and u can explain it in detail.i might make a new topic on this really curious why cfds are halal what is wrong with this business model?
All trades are happening in real markets even with cfds its just simply they do it on our behalf and when we want them to sell they will be selling the asset and giving us back what we own whether with profit or loss.there’s simply no betting or not owning the asset or thin air or all on paper.real assets are being traded in the real market.the broker charges a commission and does it on our behalf that is the whole point otherwise u will pay huge spread,fee etc but they make it cheaper like this which is why u cant actually withdraw because u need regulation and other stuff a normal person cant go around selling 500k$ or even 200k$ usd to pound to euro etc.u can try that and see how many consequences u may face and i wont even go to the fact u will get mostly bad rates,spread,taxes etc for a single trade.do u see why cfds are being used now hopefully and why brokers do this?there are very big reasons if we actually go around trading real markets.conversions in real markets directly by individual is very hard so brokers do it and hold asset on our behalf.so please explain how is this model which i explained haram and why?
Now before u bring in crypto trading.please note forex requires 100k to 500k$ funds per individual and its not digital only like crypto conversions are done through banks.like jp morgan etc that provide liquidity to brokers.unless u are managing millions of dollar dont expect the same treatment not only u may get terrible spreads + taxes + fees but it would be time taking process to do transactions settlement that are 100k to 500k$ and below that there’s no profit in forex.i hope this point clarifies why forex brokers are using cfds in general. ( Ps Dont take it negatively now trying to sound rude but trying to understand why is this model that i explained is haram)