Stockbroking Question

[ares]

Salaam,

I have a question regarding Trading for a living -

Before reading on, please understand that I converted to Islam as an adult male. I have however, believe and have ALWAYS believed there is ONE god. I have also read the holy Qur'an many times, differing revisions, with different translations, from different locations.
So unfortunately, I cannot read Arabic and perhaps something *gets lost in translation and emphasis*,
hence the Qu.


All the text that I have seen regards ANY trading for a living as Haram and all proceeds must be forfeited (given away) to charity.


Having read the Qur'an I have yet to read specific details regarding this, or ANYTHING that comes close,
to Trading as a living.


The references I have seen, are in regard to buying and selling LIKE items, in that neither the BUYER of SELLER are to make a loss .... LIKE for LIKE transactions. Call it win-win if you like. This is an interesting point, which I will discuss later.


Usury, is another conflicting issue. Sharia banks do not charge interest, however BUNDLE a *profit* component in the repayments, over the term of the loan. Sorry, but a horse is still a horse, no matter what you call it.


In regard to the prevailing LIKE for LIKE, win-win preference in Islam, share trading and any form of transaction, where another party loses out, is Haram. This is a common occurrence, with those chasing $$$ and is greed oriented, period, which occurs in ALL forms of Trading / Investment and general business activities too for that matter.


Chasing dollars is greed, period. Hence, the man in the street, is unable to fathom the complexities of Markets, what makes them tick and does not have the patience to grow and learn, as they are greedy and want profits QUICK. This is why 2-5% of market participants succeed while the remainder fail. We must remember that, the 98% that fail, never return - it's the professionals that create, maintain and utilise markets, not amatuers.


The stock market, is NOT a gambling den - which is Haram. Unfortunately, trading is looked upon as PURE speculation, without science or understanding - this is fanciful thinking, to a seasoned market professional.


In regards to LIKE for LIKE transactions, the concept is, in all reality, an an effort to preserve win-win scenarios and also preserve the concept of equality in transactions. Therefor (as a stretch in concept)is it not possible, that successful market participants, are only successful because there transactions ARE win-win ORIENTED, for if they were not, they would not be in market(s)long and would fail miserably. Every transaction needs the other side to:

1. Exist, and

2. Preferably succeed with there perceived investment strategy, as is necessary to provide the re-balancing of commodity pricing.


I understand that this topic is contentious, with the current GEOP and Econ circumstances we find ourselves in in 2011. Remember IT IS greed that put us here!!!!


I believe that the Islamic banking and trading model has merits - from a risk perspective. However NO matter how you look at it, trading isgenerally viewed as Haram, especially when viewed from certain perspectives.


The following read was interesting regarding Shari(sorry spelling) investment -

From what I can ascertain, seems the scholars of the day determine relevance - for best fit understanding and application.
The general public. Hence, they interpret it as they go along:

There are also other requirements that a company must meet before most scholars would deem it acceptable to invest in.
These are as follows:

Companies must have a debt to equity ratio equal to or less than 33%.

Companies must have Account Receivables to Total Asset ratio equal to or less than 47%.

Companies must not receive more than 9% of total income from non-operating Interest activities.


Which I can understand as it limits exposure - risk. This is a good thing.



So my interpretation, for now, stands as follows, in it's most general sense.

Halal Investment (and Trading, perhaps) can only be done:

When executed, in a way that minimises risk and structured in a fair and equitable manner for both parties.


I was unable to find the link, however am sure that one site claimed that a way to be safe*halal*, was to look at venture capital avenues as a form of direct company investment - IS this not perhaps the highest form of speculation and high risk - what contradictions of contradictions. Then again perhaps the relevant point is, the *Venture Capitalist*, knows what they are doing and structures there *investment* accordingly. It is, however, at the end of the day a speculative effort based on considerable knowledge and capabiltiy. Hmmmm, sounds like some traders / investors I know!


BTW, I'm not interested in justifying my own morality and undertakings, in this conversation. I am only seeking perspectives from
educated professionals, who can be OBJECTIVE and aren't afraid to speak there minds, irrespective of what popular belief would have us cconclude. We all know how easy it is, to follow the pack and not question ourselves to think and learn.....as we are advised to do
in the holy Al Qur'an.


I will leave the introductory Qu. as is, as I hope it will generate FURTHER questions and dialogue..........


If I have misunderstood religious text in ANY way, I am grateful for guidance and it is why I am here!


Salaam,

Peter

[Insaanah]

Salaam Peter,

All the text that I have seen regards ANY trading for a living as Haram and all proceeds must be forfeited (given away) to charity.

However NO matter how you look at it, trading isgenerally viewed as Haram, especially when viewed from certain perspectives.

Trading is generally viewed as Halal (permissible):

Sahih International
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein. (2:275)

Pickthall
It is no sin for you that ye seek the bounty of your Lord (by trading). But, when ye press on in the multitude from 'Arafat, remember Allah by the sacred monument. Remember Him as He hath guided you, although before ye were of those astray. (2:198)

Muhsin Khan
O you who believe! When you contract a debt for a fixed period, write it down. Let a scribe write it down in justice between you. Let not the scribe refuse to write as Allah has taught him, so let him write. Let him (the debtor) who incurs the liability dictate, and he must fear Allah, his Lord, and diminish not anything of what he owes. But if the debtor is of poor understanding, or weak, or is unable himself to dictate, then let his guardian dictate in justice. And get two witnesses out of your own men. And if there are not two men (available), then a man and two women, such as you agree for witnesses, so that if one of them (two women) errs, the other can remind her. And the witnesses should not refuse when they are called on (for evidence). You should not become weary to write it (your contract), whether it be small or big, for its fixed term, that is more just with Allah; more solid as evidence, and more convenient to prevent doubts among yourselves, save when it is a present trade which you carry out on the spot among yourselves, then there is no sin on you if you do not write it down. But take witnesses whenever you make a commercial contract. Let neither scribe nor witness suffer any harm, but if you do (such harm), it would be wickedness in you. So be afraid of Allah; and Allah teaches you. And Allah is the All-Knower of each and everything. (2:282)

Muhsin Khan
O you who believe! Eat not up your property among yourselves unjustly except it be a trade amongst you, by mutual consent. And do not kill yourselves (nor kill one another). Surely, Allah is Most Merciful to you. (4:29)

Sahih International
O you who have believed, when [the adhan] is called for the prayer on the day of Jumu'ah [Friday], then proceed to the remembrance of Allah and leave trade. That is better for you, if you only knew. (62:9)

I have no knowledge of stockbroking, but trade is allowed, and is stated in many places in the Qur'an as being allowed, even during the days of Hajj (the pilgrimage).

"Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter."
http://en.wikipedia.org/wiki/Trade

So we cannot say that trade in itself is Haram, or that it is generally viewed as Haram, because this is incorrect. It is generally halal, and others with more financial acumen may know of any exceptions to this general rule, e.g. when interest is involved, and more specifically concerning what the situation is with regards to stockbroking.

And Allah knows best in all matters.

Peace.

[ares]

Salaam Insaanah,

Many thanks for your feedback -

This is indeed a very complex and difficult topic to discuss. One that is dynamic and elastic
through the ages!

I look forward to seeing what other brothers and sisters have to say about the topic.


Salaam,

Peter

[- Qatada -]

asalaamu alaykum (peace be upon you) ares :)


you can ask some Students of Islamic knowledge (who are studying the religion with scholars) here;

http://ahlalhdeeth.com/vbe


I say this because you will not get many islamically qualified responses here because most of the members on this site are teens.



Peace be upon you brother :)

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[Ali_008]

:sl:

To be honest, I didn't actually get what you are asking. You constantly kept drifting away from one point to the other. However, as per the Aayaat and Ahadeeth put forward by sister Insaanah, it is quite clear that fair-trade is allowed and interest is haraam. Coming to stockbroking and shares, I'm a finance major myself and I found it really frustrating to find a halal job in finance but stock market is NOT HARAAM. I mean it. Not only does Islam allow trading of shares, it rather encourages it because whether there's profit or loss it is shared equally by the shareholders. But in today's world where even halal matters are turning into haraam by manipulation, the stock market is no exception. It is prohibited to invest in companies involved in haraam manufacture/activities such dating, alcohol, banks running on interest, glamor industry, haraam animal slaughter and others. You can invest in companies that work on halal ethics such as FMCG, furniture, IT, textiles, oil, automobiles etc.

[SFatima]

salamo alaikum, I'll look into it and help if I am able to, it is a very detailed topic indeed and I have read a bit on it, but not enough to report here, but InshAllah