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Question:

Is Online CFD trading permissible?

Answer:

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

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

It is not permissible to trade Contracts For Differences online.

What is a CFD?
Contracts For Difference trading can be understood from the following definitions and descriptions:
A CFD, or Contract for Difference, is an agreement between two parties to exchange the difference between the opening price and closing price of a contract.   
CFDs are derivatives products that allow you to trade on live market price movements without actually owning the underlying instrument on which your contract is based.[1]
The difference between where a trade is entered and exited is the contract for difference (CFD). A CFD is a tradable instrument that mirrors the movements of the asset underlying it. It allows for profits or losses to be realized when the underlying asset moves in relation to the position taken, but the actual underlying asset is never owned. Essentially, it is a contract between the client and the broker.[2]
Online Contracts for Difference or CFD trading allows you to make profits due to changes in the prices of underlying financial instruments without actually owning them.[3] 

The Fiqh:
CFDs are derivative instruments.  The value of the contract is derived from another contract.  CFDs are merely obligations to exchange certain amounts of money in a future date.  The difference between the prices at the time of the contract and at the maturity is debited from party and credited to the other. 
CFD’s are not permissible due to:

  1. The absence of a subject matter of sale.  The presence of an underlying asset in a contract   
  2. The existence of Riba as the counter-values are of the same genus and exchanged at different times and amounts.
  3. The presence of Gharar (excessive uncertainty)
  4. The presence of an element of gambling.

  
And Allah Ta’ālā Alone Knows Best

Mufti Faraz Adam 
www.darulfiqh.com
 
DISCLAIMER:
The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any institutions to which he may be affiliated.
Arguments and ideas propounded in this answer are based on the juristic interpretations and reasoning of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another Mufti may reach different conclusions to the one expressed by the author. Whilst every effort has been taken to ensure total accuracy and soundness from a Shari’ah perspective, the author is open to any correction or juristic guidance. On the event of any juristic shortcomings, the author will retract any or all of the conclusions expressed within this answer. 
The Shari’ah ruling given herein is based specifically on the scenario in question.  The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage.  This answer may not be used as evidence in any court of law without prior written consent from the author.  Consideration is only given and is restricted to the specific links provided, the author does not endorse nor approve of any other content the website may contain.


[1] http://www.cityindex.co.uk/cfd-trading/what-is-cfd-trading.aspx
[2] http://www.investopedia.com/articles/stocks/09/trade-a-cfd.asp
[3] https://www.xtrade.com/education/online-cfd-trading/
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