Is the Islamic Account on 24option Brokers Shariah Compliant?

24option

Question:

I have a question regarding Binary Options. Binary Options are not permissible in Islam due to interest rates and charges. However, many brokers (such as 24Option) allow the user to open an Islamic account, which has no interest or other interest charges applied. They claim to be one of the biggest providers for binary options in the Islamic world. On top of that, there is no risk involved as I want to use ‘signals.’ Which are essentially mathematical equations used so that I can be sure money is made from my investments (which is legal by UK law). My question is, are binary options under the circumstances of using an islamic account and by using signals permitted in Islam?

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

The Answer:

Trading binary options in the method demonstrated on the website is not Shariah Compliant.   Using Signals software to diminish risk will not remove other problematic features of binary trading.

The Fiqh (jurisprudence of the answer):

Merely having “Islamic accounts” on a trading website does not make it Shariah compliant.  Likewise, merely removing interest, surcharges, variable time frames and rollovers is not sufficient for Shariah compliance.  Shariah compliance demands an entire screening of products, services, concept, contract and application.  Without a genuine and qualified Shariah Supervisory Board, there is every chance of products and investments being non-Shariah compliant.

There are multiple issues with binary options.  The binary option is not a valid tradeable asset according to Islamic commercial law.  Hence, this is not even a valid sale.  Furthermore, when purchasing a call or put option in binary trading, one is not receiving any consideration in return; only if the trader wagered correctly on the market’s direction and the price at the time of the expiry is on the correct side of the strike price, the trader receives a fixed pay-off.  The staking of wealth, uncertainty and zero-sum game nature of the payment highlights the Qimār (gambling) and Gharar (gross uncertainty) elements in binary options.

For further information, please read:

http://darulfiqh.com/is-it-permissible-to-trade-in-binary-options/

And Allah Ta’ālā Alone Knows Best

Mufti Faraz Adam al-Mahmudi,
www.darulfiqh.com

 

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