Series of Answers from the Eminent Scholar Ata bin Khalil Abu Rashtah, Leader of Hizb ut-Tahrir
To Questions from Visitors to his Facebook Page "Fiqhi"
Answer to a Question
Trading in the (Forex) Market
To Amin Jarar
Question:
Peace, mercy, and blessings of Allah be upon you.
The question is:
Trading in the Forex market (foreign exchange market) using a contract for price differences (CFD contract), so that trading and speculation are based on the price movement of the asset, not buying and selling it as usual.
The Forex market is a global market regulated by global bodies and institutions that supervise traders, financial intermediaries, and other institutions such as banks and reserve funds.
In order to enter the Forex market, I need a financial intermediary (broker) with whom I have an agreement and a commercial contract, and within this contract is a CFD contract, so that I deposit a sum of money with this intermediary, and through an application on a phone, I can trade in foreign currencies.
[13/8, 12:41 PM] Osama Al-Far'a:
Many of the fatwas that dealt with this topic, whether their answer was permissible or forbidden (which is the opinion of the majority), only addressed the issue of leverage and the issue of overnight fees (riba), and this is something that can be easily avoided during trading, but the essence of the question is the principle of the contract, is it contrary to Sharia?
Answer:
Peace, mercy, and blessings of Allah be upon you.
What I know about Forex is that (Forex is an abbreviation of the term "Foreign Exchange", which is a huge global market for trading currencies in order to profit from their price differences.) We have previously answered a similar question on 2024/10/14, and I will quote from it what was stated about currency trading:
[- Trading in gold and silver: As for gold and silver, their sale and purchase with each other or with cash must be immediate (hand to hand), as in the hadith narrated by Bukhari and Abu Dawood from Umar: «GOLD FOR SILVER IS RIBA EXCEPT HAND TO HAND», i.e., hand to hand, and therefore, buying gold with silver or with cash is not valid except with immediate exchange...
Because after we have learned how trading is done on the Internet, the exchange is not done immediately but may take hours or days, so it is not permissible to buy gold and silver with an electronic card through the Internet unless the card deducts from the account immediately when buying gold or silver, i.e., hand to hand, so you do not receive the gold or silver except at the time when the amount is deducted from your account... And since trading on the Internet does not involve immediate exchange but after a day or two, then it is not permissible...
- Trading in stocks and bonds is haram because stocks are for joint-stock companies that are invalid according to Sharia, and because bonds are linked to riba, and we have detailed the issue of joint-stock companies in the book The Economic System, as well as in the booklet Financial Market Shocks and other books, and we mentioned in the booklet Financial Market Shocks a summary of the matter as follows:
(As for the ruling on dealing with these stocks, and debt bonds, by selling and buying, it is haram, because these stocks are stocks of joint-stock companies that are invalid according to Sharia, and they are bonds that include amounts mixed from lawful capital and unlawful profit in an invalid contract and an invalid transaction, and each bond is worth a share of the assets of the invalid company, and these assets have been confused by an invalid transaction prohibited by Sharia, so it is unlawful money, and it is not permissible to sell it or buy it, or deal with it. The same applies to debt bonds that invest money in riba, such as bank stocks or the like, as they include amounts of unlawful money, so selling and buying them is haram, because the money they contain is unlawful money.) End quote.
- Trading paper currencies on the Internet such as the dollar and the euro is haram because there is no immediate exchange, which is necessary in the exchange of cash, so the immediate exchange hand to hand as it applies to gold and silver also applies to paper money due to the reason (currency, i.e., using them as prices and wages) and we mentioned in an answer to a question in 2004/7/11 AD the following:
(Dealing in securities: Yes, what applies to gold and silver applies to it in terms of riba and other provisions of currency. This is because the realization of the reason "currency, i.e., using it as prices and wages" in these papers makes them take the provisions of currency.
Therefore, buying ribawi items with these papers applies to what is mentioned in the hadith (hand to hand), i.e., not a debt.
The issue is as follows:
- The Messenger, peace and blessings be upon him, says: «GOLD FOR GOLD, SILVER FOR SILVER, WHEAT FOR WHEAT, BARLEY FOR BARLEY, DATES FOR DATES, AND SALT FOR SALT, LIKE FOR LIKE, EQUAL FOR EQUAL, HAND TO HAND. IF THESE TYPES DIFFER, THEN SELL AS YOU WISH IF IT IS HAND TO HAND» narrated by Bukhari and Muslim from the route of Ubadah bin al-Samit, may Allah be pleased with him.
The text is clear when these ribawi types differ, that selling as you wish, i.e., like for like is not a condition, but immediate exchange is a condition. The word "types" is mentioned in general in all ribawi types, i.e., the six, and nothing is excluded from it except by text, and where there is no text, then the ruling is the permissibility of wheat for barley or wheat for gold, or barley for silver, or dates for salt, or dates for gold, or salt for silver... etc. no matter how different the exchange values and prices, but hand to hand, i.e., not a debt. What applies to gold and silver applies to banknotes with the same reason (currency, i.e., using them as prices and wages).] End quote.
By studying how this trading is done over the Internet in buying and selling gold, it became clear that the exchange or settlement is delayed for a day or two... from the date of the contract, and this violates the condition of immediate exchange agreed upon, which the Prophet, peace and blessings be upon him, stipulated by saying: "hand to hand," Bukhari narrated from Al-Bara' ibn Azib who said: We asked the Prophet, peace and blessings be upon him, about that, and he said: «WHAT IS HAND TO HAND, TAKE IT, AND WHAT IS DEFERRED, LEAVE IT», and Muslim narrated from Malik ibn Aws ibn al-Hadathan that he said: I came saying: Who will exchange dirhams? Talha ibn Ubayd Allah said, while he was with Umar ibn al-Khattab: Show us your gold, then come to us when our servant comes, we will give you your silver. Umar ibn al-Khattab said: No, by Allah, you must give him his silver or return his gold to him, for the Messenger of Allah, peace and blessings be upon him, said: «SILVER FOR GOLD IS RIBA EXCEPT HAND TO HAND...»
Therefore, it is not permissible to trade the euro, the dollar, and other currencies over the Internet due to the lack of immediate exchange) End quote from the answer. I hope this is sufficient, and Allah knows best and is most wise. 11 Rabi' al-Akhar 1446 AH corresponding to 2024/10/14 AD] End of the mentioned from the previous answer...
Based on this, since trading as we have explained above is not valid, then the contract to do the mentioned work is not valid...
This is what I consider most likely in this matter, and Allah knows best and is most wise.
Your brother, Ata bin Khalil Abu Rashtah
11 Jumada al-Awwal 1447 AH
Corresponding to 2025/11/02 AD
Link to the answer from the Amir's (may Allah preserve him) page on:Facebook
