Quant opinion: Islamic finance
I found this on a broker website about Islamic forex account:
“Islamic forex accounts are a specific category of forex trading accounts also known as interest free or swap free forex accounts.
Islamic forex trading accounts permit clients of Islamic religion to trade on interest free accounts (SWAP free or Roll Over fee) with no extra charge or penalty for the ability to trade in adherence with Islamic religious principles.
No Riba Policy:
Clients benefiting from the No Riba policy may hold positions for an undetermined time at the original opening price until they are closed and no charges will occur. Tadawul FX may revoke the ‘No Riba’ policy in case of abuse with a 48 hour notice by email.”
My questions are:
-How do they manage the no riba policy?
-Is it interesting if you are a swing trader to open 2 accounts to never pay the swap?
-When do they consider that you are abusing the system with carry trade? If you do carry trade without the most famour carry trade currencies will they allow it? If yes could this be the Holy Grail if you open a normal account and an Islamic account??
I had a chat with a broker:
Please wait for a site operator to respond.
You are now chatting with ‘TADAWULFX#2’
TADAWULFX#2: Thank you for contacting LivePerson Support. My name is Christopher. How may I help you today?
guillaume: Hi, for Islamic Forex Accounts, what are the fees?
TADAWULFX#2: there are no additional costs
guillaume: just the spread?
guillaume: ok and what do you mean about “Tadawul FX may revoke the ‘No Riba’ policy in case of abuse with a 48 hour notice by email.”
guillaume: what is a case of abuse?
TADAWULFX#2: the Islamic option is purely for our Muslim clients
TADAWULFX#2: we offer day trading
TADAWULFX#2: if someone is abusing this then the account type will be changed
guillaume: I thought that an abuse was utilisation of carry trade with islamic account?
TADAWULFX#2: carry trading on an Islamic account may be classed as abuse
guillaume: ok thanks have a nice day
NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!