Ownership of Shares

Investment Questions and Chats Stocks
#1

Sallams Mufti Saab.

I wanted to ask if it is halal to invest in sharia compliant companies through the broker Trading 212.

I use the Shares and Stock ISA, so my shares are not lent out.

But when i asked them about the ownership of the shares this is what they said:

“I would like to inform you that we hold the shares you invest in on your behalf. Whenever you invest with Trading 212, your equity is held in custody at Interactive Brokers. They are the biggest broker in the world by the number of daily trades, holding 160B US dollars in client assets.”

I aslo looked at some of the forums for Trading 212 and i found this:

The following was mentionee by a user and not Trading 212 themselves…

“You’re the beneficial owner of the shares but Trading 212 are the nominee. So you’re not going to be on the company books. Only if you close your account and ask for share certificates you can be the owner of the shares. But trust me, there’s no difference really between the two, it doesn’t change your experience”

Is using Trading 212 halal to use according to all the above?

Jazkallah

Trading212 Permissibility Ownership of Shares
#2

Salaam, most brokers hold the shares on your behalf via a custodian/third party, e.g. Wahed Invest (endorsed a lot by IFG) hold the investments on your behalf through a third party firm called WealthKernel and the shares are also registered in WealthKernel’s name. Therefore I’m guessing it is fine.

Hopefully @Mufti_Faraz_Adam / @Mufti_Billal or another member can verify what I’ve said above and provide any further explanation on this.

#3

Thanks brother.

For @Mufti_Faraz_Adam and @Mufti_Billal

I received this from Trading 212 today:

Kiril Tsekov (Trading 212)

[26 Nov 2020, 09:29 ](calendar:T7:26 Nov 2020, 09:29 )EET

Good Morning,

I hope this email finds you well.

Investments purchased by us on your behalf or transferred to us will be registered in the name of a nominee company or our name or a sub-custodian. We will be responsible and liable for our nominee to the same extent as for our own acts, including losses arising from fraud, wilful default or negligence. Whenever your Investments are registered in the name of a Nominee company nominated by us, that Nominee will hold them on trust for you. This means that you are the beneficial owner of the Investments. Any Investments held by a Nominee will be held in an omnibus account.

Your Investments will be registered in the same name as those of other clients (pooled together with other clients’ Investments in an omnibus co-mingled custody account, like with like). This means that Investments will not necessarily be immediately identifiable by way of separate certificates. If we or our third-party nominee were to become insolvent there may be delays in identifying individual assets, and possibly an increased risk of loss if there should be a shortfall because additional time will be needed to identify the assets held for specific clients. In addition, in the event of an unreconciled shortfall caused by the default of a custodian, you may share proportionately in that shortfall.

The most common way to prove the ownership of a certain security would be by requesting the issuance of a share certificate. We will be able to issue the aforementioned document as per your request. Take into consideration that the document will be displaying your name, as a beneficial owner of the equity.

Trading 212 does not support share transferring in general. You will not be able to transfer your open positions from your ISA towards your Invest account. As a Brokerage Company support only money transfers, due to various Anti-money laundering policies as well as security compliances.

Hopefully, this clarifies the matter for you. Should you require any additional assistance, please feel free to reach out to us.

Kind Regards

Can you please confirm if it is still halal to use Trading 212 as a broker to buy and sell sharia compliant shares.

Jazkallah

#4

@Mufti_Faraz_Adam any thoughts on the above.

Jazkallah

#5

@Mufti_Faraz_Adam

Please could you have a look at this for me.

Jazkallah

#6

Assalaamu alaykum,

The issue with this is that most brokers will be doing something similar. It’s always best to avoid this but it might not be practically possible unless you have a Shariah compliant broker