Fatwa ID: 08456
Answered by: Alimah Maryam Badshah
Question:
Is forex trading through prop firms (b-book) halal or haram?
Explanation about b- book prop firms:
Prop firm are the companies that gives trader simulated or virtual funds to trade. They take test like challenge 1 & 2 (like profit target in phase 1 is 10% of account size and in phase 2 its 5%) after passing the challenges they give a third virtual funded account whose profits are withdrawable, they charge some fee for the account size like $28 for $5k virtual account most of about 98% lose at challenge phases (test) phases because of gambling mindset and having no knowledge about trading strategies, so the Prop firm pay (reward) its profitable traders from the failed traders challenge fees or also make his revenue from it. Is it halal to make money from it if no future or option trading involved in it its a spot transaction with ownership because its only simulation or demo to show skills?
Disclaimer
* I am asking this question for my self only. Allah forgives me if I am wrong to explain prop firm.
* This is my information about b-book prop firm if it exist as I am telling then is it halal?
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
From the description you have given I assume you are referring to the funded simulated evaluation and verification stages conducted by a proprietary trading firm (prop firm), specifically under the category of foreign exchange (forex) where financial instruments, such as currencies, derivatives, CFDs, stocks, bonds and other monetary contracts, are “traded”. During the simulation stage of the evaluation, commonly known as a “challenge”, where fictitious leverage is loaned to the trader, who must then earn a specified percentage of profit within the given time period.
If the trader is successful in the evaluation they are given a reward in the form of real payment and granted a position as a trader in the live market where real leverage will be used. However, if the trader fails their payments are forfeit and they must re-subscribe in order to continue using the platform.
Put simply, Forex Proprietary Trading is not permissible (ḥarām). This is due to several factors, such as:
1) Trading Forex is ḥarām (impermissible) as a result of various aspects, including lack of asset possession and ambiguities in the trading details at the time of the trade.[1]
2) Payment is made for your access to their services via the membership or evaluation fees. This includes resources on how to make impermissible trades of non-shari’ah compliant and riba-based assets.
3) Teaching proprietary firms how to make impermissible trades. This is through the platform’s “challenges”, where a trader’s data is used by the firm to learn, teach and replicate a trader’s successful trade strategies in the live market for impermissible trades.[2]
4) Gambling on your performance with your payment for the access to their trading account/platform as forfeit. If a “trader” passes the evaluation challenge they “win” a payout and continued access to their account. However, if they fail to reach the challenge goals or incur “loss”, the account which they had paid for will be closed without a refund. The trader is essentially gambling to remain on the platform and to continue using their services.[3]
The Messenger of Allah (saw) said: “Whoever sets a good precedent in Islam, then for him is it’s reward and the reward of those who act upon it after him, without any deduction from their reward in the slightest; and whoever sets an evil precedent in Islam, upon him is it’s burden and the burden of those who act upon it after him, without any deduction from their burden in the slightest.” (Sahih Muslim)[4]
References:
[1]
وَأَمَّا التِّبْرُ فَهَلْ يَصْلُحُ رَأْسَ مَالِ الشَّرِكَةِ؟ ذُكِرَ فِي كِتَابِ الشَّرِكَةِ وَجَعَلَهُ كَالْعُرُوضِ وَفِي كِتَابِ الصَّرْفِ جَعَلَهُ كَالْأَثْمَانِ الْمُطْلَقَةِ؛ لِأَنَّهُ قَالَ فِيهِ: إذَا اشْتَرَى بِهِ فَهَلَكَ لَا يَنْفَسِخُ الْعَقْدُ، وَالْأَمْرُ فِيهِ مَوْكُولٌ إلَى تَعَامُلِ النَّاسِ، فَإِنْ كَانُوا يَتَعَامَلُونَ بِهِ فَحُكْمُهُ حُكْمُ الْأَثْمَانِ الْمُطْلَقَةِ، فَتَجُوزُ الشَّرِكَةُ بِهَا وَإِنْ كَانُوا لَا يَتَعَامَلُونَ بِهَا فَحُكْمُهَا حُكْمُ الْعُرُوضِ، وَلَا تَجُوزُ فِيهَا الشَّرِكَةُ.
Badā’i’ Al-Ṣanā’i’ (Vol.6, pg.56, Dār Al-Kutub Al-’Ilmiyyah)
بَابُ الصَّرْفِ عَنْوَنَهُ بِالْبَابِ لَا بِالْكِتَابِ؛ لِأَنَّهُ مِنْ أَنْوَاعِ الْبَيْعِ (هُوَ) لُغَةً الزِّيَادَةُ. وَشَرْعًا (بَيْعُ الثَّمَنِ بِالثَّمَنِ) أَيْ مَا خُلِقَ لِلثَّمَنِيَّةِ وَمِنْهُ الْمَصُوغُ (جِنْسًا بِجِنْسٍ أَوْ بِغَيْرِ جِنْسٍ) كَذَهَبٍ بِفِضَّةٍ (وَيُشْتَرَطُ) عَدَمُ التَّأْجِيلِ وَالْخِيَارِ وَ (التَّمَاثُلُ) – أَيْ التَّسَاوِي وَزْنًا (وَالتَّقَابُضُ) بِالْبَرَاجِمِ لَا بِالتَّخْلِيَةِ (قَبْلَ الِافْتِرَاقِ) وَهُوَ شَرْطُ بَقَائِهِ صَحِيحًا عَلَى الصَّحِيحِ (إنْ اتَّحَدَ جِنْسًا وَإِنْ) وَصْلِيَّةٌ (اخْتَلَفَا جَوْدَةً وَصِيَاغَةً) لِمَا مَرَّ فِي الرِّبَا (وَإِلَّا) بِأَنْ لَمْ يَتَجَانَسَا (شُرِطَ التَّقَابُضُ) لِحُرْمَةِ النَّسَاءِ (فَلَوْ بَاعَ) النَّقْدَيْنِ (أَحَدَهُمَا بِالْآخَرِ جُزَافًا أَوْ بِفَضْلٍ وَتَقَابَضَا فِيهِ) أَيْ الْمَجْلِسِ (صَحَّ، وَ) الْعِوَضَانِ (لَا يَتَعَيَّنَانِ) حَتَّى لَوْ اسْتَقْرَضَا فَأَدَّيَا قَبْلَ افْتِرَاقِهِمَا أَوْ أَمْسَكَا مَا أَشَارَ إلَيْهِ فِي الْعَقْدِ وَأَدَّيَا مِثْلَهُمَا جَازَ.
Raddul Muhtār (Vol.5, pg.257-9, Dār Al-Fiqr)
وَأَمَّا شَرَائِطُ الصِّحَّةِ فَعَامَّةٌ وَخَاصَّةٌ فَالْعَامَّةُ لِكُلِّ بَيْعٍ مَا هُوَ شَرْطُ الِانْعِقَادِ؛ لِأَنَّ مَا لَا يَنْعَقِدُ لَمْ يَصِحَّ وَلَا يَنْعَكِسُ، فَإِنَّ الْفَاسِدَ عِنْدَنَا مُنْعَقِدٌ نَافِذٌ إذَا اتَّصَلَ بِهِ الْقَبْضُ، وَمِنْهَا أَنْ لَا يَكُونَ مُؤَقَّتًا، فَإِنْ أَقَّتَهُ لَمْ يَصِحَّ بِخِلَافِ الْإِجَارَةِ، فَإِنَّ التَّأْقِيتَ شَرْطُهَا، وَمِنْهَا أَنْ يَكُونَ الْمَبِيعُ مَعْلُومًا وَالثَّمَنُ مَعْلُومًا عِلْمًا يَمْنَعُ مِنْ الْمُنَازَعَةِ فَالْمَجْهُولُ جَهَالَةً مُفْضِيَةً إلَيْهَا غَيْرُ صَحِيحٍ كَشَاةٍ مِنْ هَذَا الْقَطِيعِ وَبَيْعُ الشَّيْءِ بِقِيمَتِهِ وَبِحُكْمِ فُلَانٍ، وَمِنْهَا خُلُوُّهُ عَنْ شَرْطٍ مُفْسِدٍ وَهُوَ أَنْوَاعٌ شُرِطَ فِي وُجُودِهِ غَرَرٌ كَاشْتِرَاطِ حَمْلِ الْبَهِيمَةِ…
Al-Bahr Al-Rāiq (Vol.5, pg.281, Dār Al-Kitab Al-Islami)
(وَ) فَسَدَ (بَيْعُ سَمَكٍ لَمْ يُصَدْ) لَوْ بِالْعَرْضِ وَإِلَّا فَبَاطِلٌ لِعَدَمِ الْمِلْكِ صَدْرُ الشَّرِيعَةِ (أَوْ) (صِيدَ ثُمَّ أُلْقِيَ فِي مَكَان لَا يُؤْخَذُ مِنْهُ إلَّا بِحِيلَةٍ) لِلْعَجْزِ عَنْ التَّسْلِيمِ (وَإِنْ أُخِذَ بِدُونِهَا صَحَّ) وَلَهُ خِيَارُ الرُّؤْيَةِ (إلَّا إذَا دَخَلَ بِنَفْسِهِ وَلَمْ يَسُدَّ مَدْخَلَهُ) فَلَوْ سَدَّهُ مَلَكَهُ.
Raddul Muhtār (Vol.5, pg.60, Dār Al-Fiqr)
[2]
﴿… وَتَعَاوَنُوا عَلَى الْبِرِّ وَالتَّقْوَىٰ ۖ وَلَا تَعَاوَنُوا عَلَى الْإِثْمِ وَالْعُدْوَانِ ۚ وَاتَّقُوا اللَّهَ ۖ إِنَّ اللَّهَ شَدِيدُ الْعِقَابِ﴾
Qur’an (5:2)
[3]
وَذَكَرَ فِي الدُّرَرِ أَنَّ النَّهْيَ عَنْ إلْقَاءِ الْحَجَرِ أُلْحِقَ بِالْأَوَّلَيْنِ دَلَالَةً (قَوْلُهُ لِوُجُودِ الْقِمَارِ) أَيْ بِسَبَبِ تَعْلِيقِ التَّمْلِيكِ بِأَحَدِ هَذِهِ الْأَفْعَالِ.
Raddul Muhtār (Vol.5, pg.65-6, Dār Al-Fiqr)
(وَمَا لَا تَصِحُّ) إضَافَتُهُ (إلَى الْمُسْتَقْبَلِ) عَشَرَةٌ (الْبَيْعُ، وَإِجَازَتُهُ، وَفَسْخُهُ، وَالْقِسْمَةُ وَالشَّرِكَةُ وَالْهِبَةُ وَالنِّكَاحُ وَالرَّجْعَةُ وَالصُّلْحُ عَنْ مَالٍ وَالْإِبْرَاءُ عَنْ الدَّيْنِ) لِأَنَّهَا تَمْلِيكَاتٌ لِلْحَالِ فَلَا تُضَافُ لِلِاسْتِقْبَالِ كَمَا لَا تُعَلَّقُ بِالشَّرْطِ لِمَا فِيهِ مِنْ الْقِمَارِ، وَبَقِيَ الْوَكَالَةُ عَلَى قَوْلِ الثَّانِي الْمُفْتَى بِهِ…
…قُلْت: وَيَظْهَرُ مِنْ هَذَا وَمِمَّا ذَكَرْنَاهُ آنِفًا عَنْ الدُّرَرِ أَنَّ الْإِضَافَةَ تَصِحُّ فِيمَا لَا يُمْكِنُ تَمْلِيكُهُ لِلْحَالِ وَفِيمَا كَانَ مِنْ الْإِطْلَاقَاتِ وَالْإِسْقَاطَاتِ وَالِالْتِزَامَاتِ وَالْوِلَايَاتِ، وَلَا تَصِحُّ فِي كُلِّ مَا أَمْكَنَ تَمْلِيكُهُ لِلْحَالِ تَأَمَّلْ (قَوْلُهُ لِمَا فِيهِ مِنْ الْقِمَارِ) هُوَ الْمُرَاهَنَةُ كَمَا فِي الْقَامُوسِ، وَفِيهِ الْمُرَاهَنَةُ، وَالرِّهَانُ الْمُخَاطَرَةُ.
وَحَاصِلُهُ أَنَّهُ تَمْلِيكٌ عَلَى سَبِيلِ الْمُخَاطَرَةِ. وَلَمَّا كَانَتْ هَذِهِ تَمْلِيكَاتٌ لِلْحَالِ لَمْ يَصِحَّ تَعْلِيقُهَا بِالْخَطَرِ لِوُجُودِ مَعْنَى الْقِمَارِ
Raddul Muhtār (Vol.5, pg.256-7, Dār Al-Fiqr)
[4]
حَدَّثَنِي مُحَمَّدُ بْنُ الْمُثَنَّى الْعَنَزِيُّ، أَخْبَرَنَا مُحَمَّدُ بْنُ جَعْفَرٍ، حَدَّثَنَا شُعْبَةُ، عَنْ عَوْنِ، بْنِ أَبِي جُحَيْفَةَ عَنِ الْمُنْذِرِ بْنِ جَرِيرٍ، عَنْ أَبِيهِ… فَقَالَ رَسُولُ اللَّهِ صلى الله عليه وسلم ” مَنْ سَنَّ فِي الإِسْلاَمِ سُنَّةً حَسَنَةً فَلَهُ أَجْرُهَا وَأَجْرُ مَنْ عَمِلَ بِهَا بَعْدَهُ مِنْ غَيْرِ أَنْ يَنْقُصَ مِنْ أُجُورِهِمْ شَىْءٌ وَمَنْ سَنَّ فِي الإِسْلاَمِ سُنَّةً سَيِّئَةً كَانَ عَلَيْهِ وِزْرُهَا وَوِزْرُ مَنْ عَمِلَ بِهَا مِنْ بَعْدِهِ مِنْ غَيْرِ أَنْ يَنْقُصَ مِنْ أَوْزَارِهِمْ شَىْءٌ ”.
Sahih Muslim 1017a (Bk.12, ch.20 , sunnah.com)
Only Allah (عز و جل) knows best.
Written by Alimah Maryam Badshah
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
