The definition of an Islamic account
Both currencies and commodities are traded on the spot market for 24 hours. At 5:00 pm New York time, all open positions are rolled over for the next 24 hours and the daily interest is added to the company’s accounts every 24 hours. The company can then either pay the interest or charge the client’s account to cover the fees.
With an Islamic account, we make sure that there is no Riba in any form throughout the duration of the contract. In the currency market, if you don’t close the trade before 5:00 pm New York time, all open trades will be automatically rolled over. This normally poses a problem for those following Islamic law, due to the possible usurious interest charged for the rollover.
There’s no doubt that currency trading is one of the most difficult dilemmas in Islamic jurisprudence (Faqih). On the one hand, it requires the simultaneous exchange of currencies, which makes it a kind of hand to hand exchange. On the other hand, contemporary scholars consider the record of money transferred to or from a bank account as delivery. To resolve the issue, several decisions and fatwas have been issued. According to these decrees, the conditions for trading currency are:
- Immediate buying and selling without delay.
- The currencies need to be transferred from the account of the seller to that of the buyer and vice versa.
- The cost of the trade should be paid without delay.
- No interest on trades. In the case that there is any usurious interest, the contract will be invalid, void and Haram.
One can either trade as much as their money permits or take out a loan from a broker, under the condition that the broker doesn’t receive any usurious interest on the loan.
The benefits of an eToro Islamic account
- No interest on contracts lasting longer than 24 hours – zero rollover interest consistently.
- eToro doesn’t take any additional rollover commissions for contracts lasting longer than 24 hours.
- We do not charge any commissions or fees for account management. Our revenues come strictly from spreads (the difference between the buy and sell prices of an instrument).
- An eToro Islamic account provides you with interest-free leverage.
How to open an eToro Islamic account?
- Open a real account on eToro.
- Fund it ($1,000 min).
- Send the documents necessary to change your account to an Islamic one.
- One of our representatives will contact you shortly after that.