Is It Permissible to Use a Margin Trading Facility That Offers 0% Interest for a Limited Time?
Answered by Shaykh Muhammad Carr
Question
I have recently started trading using a new broking app called Motilal Oswal, which offers margin trading with 0% interest for the first month. Is it halal for me to use the margin trading facility in this case? Additionally, the app offers 0% interest for an extra month on margin trading for every new client I refer using my referral code. What is the ruling regarding this?
ِAnswer
In the Name of Allah, the Most Merciful and Compassionate.
I pray you are in good faith and health. Thank you for your question.
Allah says, “O believers! Intoxicants, gambling, idols, and divining arrows are all evil of Satan’s handiwork. So shun them so you may be successful.” [Quran, 5:90]
Leverage or margin trading is commonly provided for CFDs. CFDs (Contracts for Differences) are impermissible, as you do not own the underlying asset. The mutual taking possession of the commodity and its counter-value (taqabud) does not occur in contracts for differences. When you buy commodities physically, leverage is typically not used to fund the actual purchase.
CFDs remain impermissible (haram) even if no interest is involved because they do not entail actual ownership of the underlying asset.
And with Allah alone is our success.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Faraz Rabbani
Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door for students. As an imam, he has the unique opportunity to serve his community in daily life.
In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari’ah Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.
