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Best Islamic Accounts 2020

Kate Leaman
Last Update:
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The Islamic trading account arena is growing massively, and this huge takeup of the Islamic broker model has meant that it has become more popular as time goes on. The key thing to remember with Muslim brokers is that there are very strict rules on trading itself. In Muslim (or Sharia) law, it is forbidden to accrue interest on deposited funds, as such traders cannot be charged rollovers or overnight fees.

In addition to this, Muslim trades must be made instantly, with funds transferred immediately. The following brokers have all met these requirements and in addition to offering Muslim compliant accounts, fulfill a number of other key criteria making them leaders in their fields.

In our list of recommended brokers, we look for brokers that have built up a solid reputation, with a proven track record and excellent technology and tools. We also look for brokers that are regulated and offer favorable trading conditions.

Our team of in house experts have reviewed all of the brokers offering Islamic trading accounts and come up with the shortlist you see below. They have considered all factors pertaining to the very best trading experience.

The brokers below represent the best Islamic brokers 

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BrokerRatingOfficial SiteRegulationsMin DepositMax LeverageTrading PlatformsFoundation YearPublicly TradedTrading Desk TypeCurrenciesCommoditiesIndicesStocksCryptoCommission on tradesFixed spreadsoffers promotionsOfficial Site
First Prudential Markets Pty Ltd
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Your capital is at risk

ASIC, CySEC

$100

1:500

IRESS, MT4, MT5, webtrader

2005

No dealing desk

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Your capital is at risk

IC Markets
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Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

ASIC, CySEC, FSA

$200

1:500

cTrader, MT4, MT5

2007

ECN, No dealing desk

Visit Broker>

Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

OctaFX
Visit Broker>

Your capital is at risk

CySEC

$50

1:500

cTrader, MT4, MT5

2011

ECN, STP

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Your capital is at risk

Tickmill Ltd
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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.27% and 73.32% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CySEC, FCA, FSA

$100

1:500

MT4

2014

No dealing desk

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.27% and 73.32% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Plus500
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80.5% of retail CFD accounts lose money

ASIC, CySEC, FCA, FSB, ISA, MAS

$100

1:30

Plus500

2008

No dealing desk

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80.5% of retail CFD accounts lose money

Pacific Financial Derivatives Limited
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Your Capital is at Risk

FMA

$0

1:300

MT4

1999

No dealing desk

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Your Capital is at Risk

Pro Tip: Most of these brokers offer free demo accounts so you can test the brokers and their platforms with virtual money. Give it a try with some play money before using your own cash.


Here’s a list of the Best Islamic Brokers
 

Note: Not all Forex brokers accept US clients. For your convenience we specified those that accept US Forex traders as clients.

FP Markets

Regulated By:ASIC, CySEC

Foundation Year:2005

Headquarters:Level 5, Exchange House 10 Bridge St Sydney NSW 2000, Australia

Min Deposit:$100

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Your capital is at risk

FP Markets was founded in 2005 and is regulated by the Australian Securities and Investments Commission (ASIC), offering segregation of client funds and top tier liquidity. FP Markets is a group of companies that includes First Prudential Markets Ltd which is authorised and regulated by the Cyprus Securities and Exchange Commission.

FP Markets also offers a range of education and market analysis resources through the Traders Hub which includes technical analysis and fundamental analysis articles and videos, as well as, trading ebooks and video tutorials. Users can access live support via telephone, email and live chat 24 hours a day, 5 days a week.

Pros: Cons:
  • ASIC regulated.
  • ECN pricing and DMA trading available.
  • 10,000+ tradable financial instruments.
  • Wide range of trading platforms and trading tools available.
  • Excellent customer support and education tools.
  • The volume of choice of markets and accounts may be overwhelming for beginner traders.

IC Markets

Regulated By:ASIC, CySEC, FSA

Foundation Year:2007

Headquarters:International Capital Markets Pty Ltd Level 6 309 Kent Street Sydney NSW 2000, Australia

Min Deposit:$200

Visit Broker

Trading Derivatives carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Derivatives may not be suitable for all investors, so please ensure that you fully understand the risks involved, and seek independent advice if necessary. A Product Disclosure Statement (PDS) can be obtained either from this website or on request from our offices and should be considered before entering into a transaction with us. Raw Spread accounts offer spreads from 0.0 pips with a commission charge of USD $3.50 per 100k traded. Standard account offer spreads from 1 pips with no additional commission charges. Spreads on CFD indices start at 0.4 points. The information on this site is not directed at residents in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

IC Markets was founded in Sydney, Australia in 2007 and is regulated by the Australian Securities and Investments Commission (ASIC), as well as the Seychelles Financial Services Authority (FSA). According to the broker’s website, they processed $646 billion worth of trading volume in April 2019 alone.

While the broker offers services and features designed for both beginner and professional traders, the company promote themselves as the ‘go to’ choice for high volume traders, scalpers and trading algos due to their New York Equinix NY4 data centre – processing over 500,000 trades per day.

Pros: Cons:
  • True ECN broker with institutional grade liquidity.
  • MetaTrader and cTrader available on desktop, web and mobile.
  • Wide range of tradable products with 24/7 customer support.
  • Impressive library of educational material and videos.
  • Beginner traders may be overwhelmed by the choice of markets and platforms.

OctaFX

Regulated By:CySEC

Foundation Year:2011

Headquarters:Suite 305, Griffith Corporate Centre, Beachmont, Kingstown, St. Vincent and the Grenadines

Min Deposit:$50

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Your capital is at risk

A very popular broker for Islamic traders, offering a special Islamic account and also very competitive spreads with no rollover. Trade with the MT4, the MT5 or the cTrader at OctaFX across windows and MAC. Trade cryptos and other assets via CFD’s on an ECN model. The broker offers a regulated and non regulated arm for traders depending on where they are based.

Pros Cons
  • Good choice of accounts (Micro, ECN, Pro, Sharia)
  • Forex ECN available with 1:500 leverage
  • Trade on MT4, MT5 and cTrader across Desktop, Web and Mobile
  • No stocks to trade
  • Limited commodities for trading

Tickmill

Regulated By:CySEC, FCA, FSA

Foundation Year:2014

Headquarters:1 Fore Street, EC2Y 9DT, London, United Kingdom

Min Deposit:$100

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79.27% and 73.32% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Tickmill was founded in 2014 and is regulated by the UK Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC) and the Seychelles Financial Services Authority (FSA).

The broker provides more than 80+ CFD instruments to trade on covering Forex, Indices, Commodities and Bonds through three core trading accounts called the Pro Account, Classic Account and VIP Account. They also offer a demo trading account and Islamic swap-free account.

Pros: Cons:
  • Multiple regulations and licences.
  • Commission-free trading accounts available.
  • Competitive spreads and overnight swap charges.
  • Impressive range of trader research tools and analysis.
  • No stocks available.
  • MetaTrader 5 not available.

Plus500

Regulated By:ASIC, CySEC, FCA, FSB, ISA, MAS

Foundation Year:2008

Headquarters:Building 25, MATAM, Haifa, Israel

Min Deposit:$100

Visit Broker

80.5% of retail CFD accounts lose money

Plus500 is a leading CFD trading platform with support for stocks, indices, cryptocurrencies, and Forex. This commission-free brokerage charges very low spread-rates and offers fast trades on a great platform. Plus500 supports complex trades, includes negative balance protection, and makes trading an educational and hopefully profitable venture.

You can start with a free demo account to test the platform and any trading strategy. Real money accounts offer leverage of up to 300:1. This broker is based in Israel and regulated by the Financial Conduct Authority (FCA) in the UK.

Pros: Cons:
  • Support for 2000+ products to trade across global markets,including Forex, commodities, shares, indices
    and cryptocurrency CFDs
  • No commission and low spread costs
  • Advanced trades and fast execution
  • Licensed in several regulatory hubs, and publicly listed
  • Only CFDs, no direct Forex trades
  • High rates on margin/leverage accounts
  • Less research data than some competitors

Pacific Financial Derivatives

Regulated By:FMA

Foundation Year:1999

Headquarters:Level 8, 12-26 Swanson Street, Auckland Central, Auckland 1010

Min Deposit:$0

Visit Broker

Your Capital is at Risk

Pacific Financial Derivatives Ltd (PFD) is a global online broker that operates from Auckland in New Zealand. The broker was established in 1999 by an experienced Japanese investor who has a similar business in his native country. The brokerage offers Forex, indices and commodities for trading on its platforms. With many years experience in the business, PFD has become a globally established brand.

Pros Cons
  • Broker is regulated by the FMA in New Zealand.
  • Well-established broker with over 15 years experience.
  • Low trading fees and charges.
  • The provided demo account expires after 15 days.
  • The education suite provided is obviously inadequate.
  • There are no bonuses, promotions or incentives to encourage the trader.

What is a Swap Free (Islamic) Account in Forex?

An Islamic or Swap free trading account is a trading account allowed by the Islamic Shariah principle where there is no interest applied for an overnight position. This type of trading account is often referred to as Islamic account due to the Islamic Shariah principle which forbids Muslims from charging and paying interest on a loan. In addition because the forex market is a leveraged market, trading forex on leverage is technically a loan transaction between the Muslim trader and the forex broker. To better understand how swap free trading accounts work, let us examine the concept of a roll-over forex trade and how it can affect the trader.

In the forex market, currencies are always traded as a pair eg. EUR/USD, as it involves the buying or selling of one currency for another. For each currency, there is a prevailing market interest rate which can differ between the two currencies of the traded pair. If a forex trader enters into a market position and holds the position in the currency which has a higher interest rate than the other currency in the pair, there will an interest differential between the two currencies. Since the trader’s position is in the currency with the higher interest, this means that he will earn the interest differential once the position is carried over to the next trading cycle. This sort of trade where the focus of the trader is to earn on the interest differential is known as a “Carry Trade”.

The carry trade strategy was often used by forex traders before the 2008 global financial crisis where interest on currencies such as the Australian dollar were as high as 8% in comparison to the Japanese yen which had an interest rate as low as 0.1%. So if a forex trader’s position was on the Australian dollar, his trading account would earn this interest differential. But if the trader’s position was in the Japanese yen, his trading account would be debited by the same amount of interest earned if the position was in the Australian dollar. This happens at the end of every trading day when the position is rolled over to the next trading day.

Given the fact that a Muslim trader is forbidden by his religion to charge or earn interest, how can he trade the forex market without breaking the Islamic Shariah principle on interest payment/charges?  Well, the solution to this dilemma is to trade the forex market with a swap free trading account.

So how does a swap free trading account work? Normally for overnight positions, the forex broker will retain a portion of the interest swap as handling charges. In the case of the swap free account, the broker instead of taking a portion of the rollover interest swap, charges a fixed commission against the trader’s account balance. Alternatively, the broker may just widen the spreads more on such trades. Just before the rollover, the trader’s position is closed and then reopened once the rollover periods is completed. In this manner, the trader will not be charged any interest or get to earn any interest on his trade. Since no swaps were involved, this type of trading accounts is called a swap free account.

Is it Halal or Haram for Muslims to trade forex?

As more and more people start to participate in retail forex trading and it becomes more popular, many Muslims are asking if it is “haram” (forbidden) or “halal” (permissible) for them to participate in forex trading. As the Muslim population represents a quarter of the world’s population and a sizeable market, many forex brokers are beginning to realize the importance of clearing the air on this issue. There is a consensus that forex trading with swap free accounts is halal due to the fact that there is no interest applied, and commerce and trading has always been an activity that has been encouraged by Islam.

The Muslim’s Way of Life

“Shariah” is an Arabic word which is literally translated to English to mean “the way”. In the context of Islam, it is taken to mean God’s divine law and is compulsory for every Muslim to follow. Taken from the main doctrines found in the Muslim’s holy book, the Quran, and from the Hadiths, the wise sayings and teachings of Prophet Muhammad, Shariah laws represent a way of life which every Muslim aspires to follow.  These laws cover all aspects of how a Muslim should live and governs how a Muslim should conduct himself in society and in commerce.

Shariah Law No Riba Principle

In Islam, interest or “Riba” is strictly prohibited and is regarded as a major sin. In Islam, a Muslim has always been encouraged to be selfless and be generous and make sacrifices to those who are less fortunate than them in life. For example, if a person in need was to approach a Muslim for loan, the Muslim is obliged to provide the loan without charging any interest on the loan.

As you can see, the Islamic way of life is completely different to the modern way of life where personal benefits and self interest reign. The differences also extend to the modern banking system and the Islamic banking system. In Islamic banking, there is interest involved and banking transactions are conducted using 2 types of arrangements known as Mudharabah and Musharakah.

The Mudharabah Arrangement

A Mudharabah banking arrangement is a mutually beneficial arrangement which doesn’t involve the imposition of interest in the transaction. Essentially, both the depositor (investor) and a bank enters into a profit sharing arrangement where the profit from the transaction is shared based on a mutually agreed formula. As this form of arrangement is regarded as a partnership, the investor is also liable for a portion of the losses should the investment transaction fail. In short, the Mudharabah banking arrangement permits Muslims to loan out their money for a share of the profits in a similar fashion to where conventional banks pays out interest to depositors. So what a Mudharabah banking arrangement does is to extend the concept of an ordinary business partnership to cover the relationship between the depositor and the bank.

Musharakah Arrangement

With the Musharakah arrangement, the bank enters into a business relationship with an individual who is regarded as the investor. Under this arrangement, profits are divided based on the capital contribution. The profit which the bank earns from the venture is essentially the “interest” that a conventional bank would have earned by making a loan to an investor. The Musharakah arrangement is normally used when an individual wishes to take a mortgage for the purchase of a property. For mortgages under the Musharakah arrangement, the property is actually purchased by the bank in return for a share of the rent that the property would earn from the occupier of the property. The Musharakah arrangement works just like a normal mortgage arrangement where all the terms and conditions between the parties are clearly defined. Once the buyer has fully paid up his loan, the arrangement between the buyer and the bank will end.

Permissibility of Islamic account

As retail forex becomes more popular over the years, it has triggered a debate among Islamic scholars as to whether it is permissible for Muslims to participate in it. The availability of swap free trading accounts means that Muslim traders can still participate in forex trading while fulfilling their religious obligations at the same time.

Which brokers offer Islamic trading account?

As mentioned earlier, there is a sizeable market among the Muslim populace for forex brokers to tap into. As such, most forex brokers nowadays are beginning to offer swap free accounts as part of their product offerings to Muslim traders. While swap free accounts operate without rollover interest being applied to it, traders trading with a swap free account also have full access to the range of products which normal trading accounts have access to. It is important that when looking for brokers with Brokers with Swap Free/Islamic accounts that you check if they meet the following criteria:

  • Full access to all assets that are available for trading
  • Leverage offered by the broker operates on the “Hiba” policy (this means the broker “donates” in charitable manner when “loaning” the money for traders to trade on leverage).
  • No Interest for overnight positions
  • No hidden fees
  • All positions are closed by the end of the trading at 23:59:59.

Conclusion

Now that we understand that an Islamic or Swap free trading account is a trading account allowed by the Islamic Shariah principle where there is no interest applied for an overnight position, Islamic traders can benefit from online trading. In order to assist Islamic traders in finding the best brokers for them to trade with, FX Empire has ranked the leading brokers offering the best swap free Islamic Accounts.

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