Are you worried about Shariah Law and binary trading? In this article you will find all important information that concerns fundamental religious rules of the Islam. We have analyzed forbidden financial transactions and tried to explain what is one of the worst Islamic sins in Muslims life. There are also binary brokers that provide Islamic accounts offering to traders interest free accounts. Read this article and start trading by honoring the Sharia Law.
Modern world and Islamic Law
Islamic banking has started to rapidly grow on financial market in the last few years. This trend has first been recognized by UK government, so they have become the first non – Islamic country that implemented Islamic rules into financial sector. After entering the UK financial sector, the assets of Islamic banks started to grow very fast, and statistical reports shows that average rate has grew 17% per year, between the 2008 and 2014 period. The difference between conventional and Islamic banks is that Islamic banks have grew over three times faster than conventional. Islamic banks respect the rules and principles of Islamic Law or Sharia Law. To be able to collaborate with the modern financial sector, Muslims can use Mudharabah and Musharakah Arrangements that apply Shariah Rules.
Brokers offering Islamic Accounts
The new financial policy was accepted by many brokerage companies around the world. Every day there is more and more binary brokers that offer Islamic accounts. They started to offer interest free Islamic accounts. Those account types are strictly made for Muslim clients without charging them for additional financial penalties. Islamic accounts offer the same range of trading assets like the regular accounts, including commodities, stocks, currencies and indices. Also, traders can trade with any account type which is offered by that broker – depending on amount of investment.
If there are Muslim traders which want to trade with binary options, we have searched for a few brokers that offer Islamic accounts. Those accounts are always respecting Shariah Law, and features offered by those accounts are written below.
Features offered by Islamic broker accounts:
- Shariah approved trading and investing account
- No Riba Policy
- Without swap commission
- Interest free trading
- Hiba – many brokers offer Hiba, which means “to donate” or “to give” in charity in return for loans
- without hidden charges
- closing all positions at 23:59:59
- trading with all available assets
There are a lot of brokers offering Islamic Accounts and we are going to mention top rated brokers on the market. Here are some of them:
Sacred Riba policy
Shariah Law that is implemented in all aspects of Muslim life forbids “riba” what can be interpreted as interest or even usury. Riba is one of the biggest sins that can happen in this religion. The main goal is to create a society that grounds on selflessness and sacrifice. For example, if poor people are in need of money, the reach should provide his necessity and give him a loan but without any interest in it. The difference between Islam and interest ridden societies is very big, because non Muslim societies are only concerned with their own interest. Modern banking grounds on the basis of interest payments to their depositors and to its borrowers. Islam has announced two approved a few arrangements which have allowed banking transactions but with strict rules regarding fixed interest.
If you are still interested in what is the difference between conventional and Islamic financial system, this part will explain how it really works. So, the answer is that Muslims can still earn or make money with the same system of lending out their investments, but the difference is that interest rates and fees are not explicitly presented. This is why Mudharabah Arrangement has been brought and it accepts the venture capital deal between the bank and the borrower. This profit sharing arrangement explains that if the company bankrupts, the lander and the borrower are about to lose their time and effort invested in the company.
In essence, there is no guaranteed interest on investments that depositors or investors have right to, but investments made by the bank, and more importantly – returns, are shared between the bank and depositors. This is in many ways fair since it forms the relationship like a joint venture with risk sharing where both parties have a stake and interest for it to succeed.
This agreement is similar to Mudharabah and the difference is that it describe s a joint venture between a bank and a company. In Musharakah agreement profits are divided depending to their relative capital inputs. The bank returns are bounded to enterprises profits and the partnership between them will end when the loan is repaid. This agreement can be applied when somebody wants to buy a property. The buyer can reach the mortgage finance, so the property earns a rent from the occupier, being paid by the buyer and the bank which is in relation to their share of the equity. The partnership between participants agrees that the profit margin is clear, usually it is agreed at the beginning of the banking transaction.
Born to trade
The Shariah Law has introduced the whole new concept for Muslims and finally accepted binary options trading as legal Islamic banking business sector. As we already know, trading has played a big role in the expansion of Islam since the beginning of the religion itself. The Muslims are very passionate in trading, so modern times have brought the opportunity for them to trade with binary options. Many brokerage companies have introduced new accounts available for Muslims, and have called them Islamic Accounts. Islamic trading accounts are very important trading vehicles, allowing their investors to trade interest free.
According to the research, Muslim population makes over 23% of the world population of the world. This means that over 2,08 billion people are considered to be Muslim. Muslims mostly live in the parts of Indonesia, Middle East and Africa, but Islamic trend also grows in some parts of Europe, China, Russia and America. Islam is considered as fastest growing religion among all religions, through birth rate but as well as rate of conversion. The growth is so high that predictions say that by the 2030 every third person will be Muslim.
The Islam religion believes that there is only one God and the purpose of people is to worship God. Islamic religion is described as most rigorous monotheism among all other religions. The Islamic sacred book is called Qur’an and it is believed that It has been written by the archangel Gabriel and dictated by Muhammad Himself. Holly Book Qur’an is written in the 12’th century on Arabic letter and it consists 114 chapters. This religion has very specific rules about social aspects of Muslim’s life and those rules are being respected by its worshipers around the world. In this research we have been trying to illustrate how these sacred rules affect on modern banking era and what are the most important Islamic Laws concerning this economic communication with the rest of the world. In the next chapter we will define the most important Law known as Islamic Law or Shariah Law which regulates economic, social, cultural and other parts of Islamic religion. If translated to English, Shariah specifically means – “the way”.
Islamic Law or Shariah
Islamic Law explains the fundamental religious concept of Islam which is regulated by many rules in all aspects of a Muslim’s life. This regulation is also called Shariah, which provides religious, economic, social, political and cultural aspects in Islamic societies. It involves private and public activities for their life on earth from the day they are born. This religious Law tells them how to pray, what food they can eat, it describes how they should dress and specifically interesting for this topic – how they can use their money and wealth. Shariah Law literally means “the path leading to the watering place”. Shariah Law strictly forbids acceptance of fees or interests for any kind of loans because it is considered as usury or “riba”. To accept financial transactions between Muslims and the rest of the world, there are number of economic aspects and defined laws that honored this sacred rule and regulated it in order to work.
Law of transactions
Modern banking is heavily based and dependent on the concept of “interest”. When people deposit their money in the bank, they are entitled to interest payments. Bank charges interest on loans it gives to household and companies. As we already mentioned, interest is strongly prohibited by the Shariah Law. Eventually, this modern banking system has been accepted in the entire world so it was inevitable to merge with Islamic countries. Modern banking institutions eventually became essential part of humankind on the West and subsequently in the rest of the world. As many Muslims do not live in predominantly Muslim countries the rules had to been modified for them to be able to exercise their right to practice their religion. There were still many Muslims that believed in the suppression of interest, but those who decided to accept new rules, they followed restricted features that were not? allowed by the Islamic Law. According to Islamic Law, any kind of interest on a capital loan or investment, speculative transactions nor gambling transactions is allowed. As a fact, any transaction that in terms of the material benefits can not be precisely forecasted is strongly forbidden by Shariah.