I have an Invest Account with Trading 212. I was recently requested to agree to share lending , where the brokere borrows my stocks (long positions) to used them in other operations (I beleive short selling and may be other stuff).
If I dont agree to the terms, then I will have to close my account as I wont be able to buy anymore shares
Can you please confirm if the above is halal - as I beleive my stocks will participate indirectly into short selling (which I think is Haram)
Below is the specific agreement. We have been told that if we do not agree to these terms we won’t be able to continue to use the platform after november
22.1. We can only engage in securities financing transactions or lending of Your shares held in Your Account with us if we obtain your express prior consent to this.
22.2. By signing this Agreement, You hereby give Your explicit consent to Trading 212 to undertake and engage in securities financing transactions, including lending the shares which are held in Your account with Us. A reputable third party will be the counterparty (the “Borrower”) in this respect to Us and as such will have the obligation to redeliver the shares that are lent. We require the Borrower to provide Us with appropriate collateral and we will monitor this to ensure it is appropriate, including that it is of sufficient value in respect of the shares loaned. To mitigate the risk of the Borrower being unable to redeliver the shares lent, We will receive cash as collateral to the amount of at least 102% of the value of the Shares lent. You hereby agree that all proceeds paid by the Borrower in excess and on top of the aforementioned collateral shall not be related to Your shares but rather to Trading 212’s engagement in a securities financing transaction, hence will be due to Trading 212 and Trading 212 only.
22.3. The shares lending arrangement will not affect your ability to sell your shares at any time, in the same manner as trading any other shares in your Trading 212 account. The Borrower will guarantee liquidity so that Share Lending will not negatively affect Your ability to place a sell order, or to the best execution of such order.
22.4. When Trading 212 lends Your shares, You will continue to be the beneficial owner of the shares and You continue to have the market exposure inherent to beneficial ownership of the shares (i.e. if the share price increases while you hold the shares but are lending them out, your equity in the position will increase. If the price goes down, your equity will decrease).
22.5. Shares that are lent out are generally recalled from the Borrower before ex dividend-date in order to capture the dividend. Where the recall does not take place, you will be entitled to a payment from the Borrower equivalent to the dividend you would otherwise have received.
22.6. With respect to shares lent, voting rights will be held by the Borrower, although the borrower will be required to account for the benefit of corporate actions such as rights or bonus issues. You will receive any other rights, warrants, spin-off shares and distributions made on loaned shares.
22.7. We have systems and controls in place to ensure that only shares belonging to clients who have given prior express consent can be used for shares lending, as such your consent and agreement is required by signing or equivalent. If You no longer want to participate in Share Lending You will have to terminate this Agreement or have a Sell-only Limitation placed on your account and close all of your current positions. Any positions left open would still be eligible for Share Lending.
Assalamualikum Mufti,
After reading this post , I have contacted with trading212 via chat. I have add the screen shoots here. Just incase if you don’t know, Trading 212 offers 3 types accountCFD, Invest and ISA. this lending program will apply for Invest account not for the ISA account. so will it be permissible to use ISA account to invest on the tradin212 platform ? Zazakallah
Yes, the ISA account is absolutely fine to use. The concerns are on the invest account. Of course, the CFD account is not Shariah compliant from the outset.
Admiral Markets is worth checking…
I have another account with them, they just confirmed that they dont do any share lending with invest accounts, but they dont do transfers so I ll have to manually sell on T212 and re-buy on AM
They use MetaTrader 5, which includes stop loss plus plenty of other stuff
I think they are good compared to T212, better coverage, support is excelent - My account advisor is muslim so makes it easier to explain my concerns.
One major drawback is that it’s not full free - though commisions are reasonable
Good luck
Fees are average 0,1% with Minimum per trade are: 1 €/$/£ for EU, US, UK.
Minimums for Autralia and Japan are more expensive - approx 5€ and 10€ respectively
