Understanding Money in Islam #
Original question: “May I seek your opinion on whether investing on this platform, https://forexsuggest.com/triumphfx-islamic-account/ is shariah compliant ? As far as I know all online forex investing is not shariah compliant but this platform states that’s its shariah compliant.”
Since we have no premium subscription nor direct access to the TriumphFX Islamic Account, our review and opinion are purely based on the available information and stated claims from the website. Based on the claims made by TriumphFX, we can understand that the Islamic Account (“the Account”) adopts and operates based on several fundamental Shariah parameters and guidelines. However, upon thorough assessment, all of their claims are merely statements without concrete explanations or justifications. Thus, below are several Shariah issues we noted from our evaluation:
Rollover Interest
Despite TriumphFX’s claim that the Account carries zero rollover interest, we can not ascertain whether the handover of the exchanged currency between the traders and the brokers/platform is done immediately and effectively prior to the conclusion of the trading transactions. We also have doubts about whether the exchanged currency is traded for the same amount or not. On top of that, it is unclear whether the whole exchange and trading of currencies actually takes place on the platform and not just mere numbers on a screen. Failure to meet these two conditions (immediate delivery and same amount) renders the exchange arrangements unlawful due to elements of riba al-fadhl and riba al-nasiah.
Margins and Loans
We observed that TriumphFX highlighted several Shariah prohibitions, such as interest on loans, margin trading, and margin deposits. However, we are sceptical about whether all shariah principles are truly observed in the Islamic Account with proper shariah governance and oversight, as there are no visible efforts to prove the credibility of their claims. This is because interest on loans, margin deposits, and margin trading are the bedrock of every online retail forex trading business model. In this case, it is common practice for all traders to borrow some amount of money from their brokers/platform providers and later pay back a higher amount. From a Shariah point of view, this is very similar to the interest-based loan (riba al-fadhl and riba al-nasiah), which is described in a Hadith as follows: “Any borrowed money (loans) that later brings any benefits (material or immaterial) shall be equal to riba.”
Leverage
They claimed that traders can leverage their accounts with a minimum of 1:30 and a maximum of 1:500. However, regardless of what the leverage ratio is, leverage (conditional loan) is not permissible in Islam. Whether the loan generates any interest or not, as long as the leverage is intended for the sole purpose of the account holder to only trade on a specific platform and to make a profit from the spread. Hence, it is not allowed and impermissible. This scenario is called a conditional loan with a sale (al-bay’ wa al-salaf), and Islam strictly prohibits this type of business activity. This is based on the Hadith “Every loan, which leads to a benefit, is usury”.
Precious metals
They claimed that the traders could also trade precious metals (gold and silver). However, there is no disclosure pertinent to the status of the precious metals and/or illustrations of how it works. The fundamental questions like who owns the gold, which party exactly buys and sells the gold, whether the gold truly exists, whether the gold is sufficient, can the gold be delivered, how is the ownership indicated, are very important aspects that need to be scrutinised further prior to confirming whether the trading activities truly comply and conform to the Shariah guidelines and parameters. Failure to meet any of those fundamental conditions will render the contract unlawful in Shariah.
Therefore, following the above explanation, we may conclude that the TriumphFX Islamic Account is a Shariah non-compliant investment/product as it does not satisfy the fundamental Shariah requirements and parameters. Most of their technical aspects and operational systems are ambiguous.
Most importantly, it is essential to note that all/any types of online retail forex trading available in the market are unlawful (haram) for Muslims to participate in. Regardless of whether the online retail forex trading platform claims to be run on Islamic principles and/or in accordance with Shariah guidelines, the operating foundations of its business model are unlawful.
Lastly, we advise our community to refrain from participating in the online forex trading platform as per established fatwa and Shariah rulings issued by the authorised Islamic regulatories and institutions.
Allah knows best.
