Question for brother Nur

[Qandalawi]

Asalamu Alaykum, and Ramadaan Kariim to you first of all.

 

My question relates to the legality of Stock market trading and/or specially the Forex - currency trading, according to Islamic Sharia law?

[Nur]

kuun Kuun Bro.

 

Prelude:

 

Any wealth Transaction/ transfer between any two or multiple parties has the following forms:

 

 

1. Sale Transaction: Both Parties own their decisions and respective commodities, not coerced, sound mind, free citizens, and are willing to engage in trading goods to goods ( Barter), or goods to cash.

 

2. Gift: Giver of gift is owner of goods and willing, own her/his decisions, not coerced and free, sound mind.

 

3. Loan: Lender of wealth is willing, own her/his goods/cash and decisions, not coerced and free, sound mind.

 

4. Gamble: Multiple parties agree on transferring wealth randomly by means of mutual chance based transactions, where gaining and losing is highly speculative in nature or outright luck.

 

5. Robbery: One party takes control of others wealth by virtue of force.

 

6. Scam: One party takes control of others wealth by virtue of deception, misinformation and misrepresentation of terms and goods and conducts the transaction with lack of transparency.

 

7. Stealing: One party takes control of others wealth by virtue of disabling or bypassing security measures that protects the rights of the owner of the goods.

 

 

Now, back to your question:

 

The eNuri Islamic financial Ten Commandments are:

 

1. Voluntary Sale is permitted.

 

2. Voluntary loan is permitted.

 

3. Interest or usury is forbidden

 

4. Local Currency is an instrument of transaction, not a commodity to be traded or hoarded in itself. ( Forex is different animal )

 

5. Hoarding of goods, and monopoly are forbidden.

 

6. Games of Chance are Forbidden.

 

7. Any Non-Transparent Wealth transaction is Forbidden.

 

8. Trading of Forbidden goods and/or transactions is also forbidden. Any Transaction built on a deal that incorporates, directly or implicitly one of the above forbidden classes of wealth transfer is forbidden.

 

9. Any Wealth transaction in which one party bears asymmetric risk exposure, and the other has the advantage of asymmetric profit potential is forbidden. Level of Reward must be directly related to Risk Exposure, the higher the risk, the higher the reward.

 

10. Lending money as a business is Forbidden.

 

 

Now, we need to define wealth transactions in the stock market, options and futures, Foreign Currency Exchange.

 

Your question is quite loaded, and to explain it will require few considerations:

 

 

1. First: How does the Stock Market operate:

a. What are the commodities that are sold and bought? Real or imaginary? at hand or or in another location, present or in the future, is seller able to deliver or is it unknown.

b. Nature of Goods that are sold? Do they fall in Haram category.

c. The selling platform, is there transparency?

d. Is the process of sale of stocks asymmetric, or it favors those who have insider information ( Madoff syndrome)?

 

 

For the Second part of your question:

 

Currency trading is as the name implies trading of unlike goods ( Dollar to Schillings) in which the currencies are reacting to market forces of demand and supply and hence appreciate or depreciate with respect to each other dynamically, so at any given moment, they will have different values with respect to each other.

 

Now, that does not mean that currency trading does not introduce Haraam transactions as we have listed above. InshaaAllah, I will come back with more detail next time I log on, so be patient.

 

 

How does the Stock Market Work.

 

Like any commodities market like the Suuqa Bakaaraha, a market is place where sellers and buyers trade stocks or shares of what a company is worth at a particular point in time.

 

Stocks hence are the ownership of shares of real companies assets and profits/ losses.

 

 

The Real Economy Production of Misery

 

Let us say that you are the owner of the stock certificate of an imaginary weapons trading company in Mogadishu, whose business model is based on buying weapons from disgruntled Ugandan and the TFG Mercenaries and selling them to the Shabaab resistance movement. Let us say, the TFG and Ugandans salaries were not paid for 3 months because the TFG Ministers and Ugandan generals have deposited their salaries in an Israeli company that deals in wholesale of weapons to the UN and African Union. The corrupt officials of the African Union have their balls on the table below a hammer, they have no choice but approve weapons exporters diktat

 

 

The Financial Markets

 

Now, shares of the Israeli company are being traded in Tel Avis and New York, where the Ugandan generals and Somali warlord politicians are making hefty dividend profits, while, you as the small time retail weapons trader make your money from angry Ugandan and Somali Warlord government selling their weapons to the opposition al Shabab.

 

The value of the stocks of the Israeli weapons company closely follows the conditions in Mogadishu. When there is peace or the likelihood of peace, shareholders in Tel Aviv panic and sell their shares which makes the Israeli Ministry of Finance worried, then Israeli Ministry of Defense is worried, which in turn makes the the Pentagon worried, which warrants an Ethiopian invasion of Mogadishu to keep the demand for weapons at acceptable levels. The White House declares that the US will fight the Demonized Al Shabab Movement to the last Ethiopian and Ugandan. This white House declaration is a calming measure that is meant for market correction, so Israelis can trade in weapons market safely.

 

Now, the stocks have two values, real value or the book value, and the speculated value. When the stocks are traded more than the book value, it means a new round of unrest in Mogadishu is being planned in Tel Aviv and Washington. So, a good leading indicator of peace in Somalia is to follow the global arms trading business in which Israel is the 7th largest exporter just behind Ukraine, Canada, UK, France, US and Russia.

 

Now, the derivatives and securities market in which more wealth are traded is another animal altogether. Let us say, I found out that there will be a new round of fighting in Mogadishu, I come to you and try to sell you the option of securing current prices, you only pay me 5% premium for the option now. If as predicted violence erupts, demand increases and prices go up, you are secured, if on the other hand peace is reached, demand falls, and prices become cheaper you have only lost a slight money.

 

Now, imagine trading your own options, selling to a guy who buys them by the bushel in New York, and knows what to do with it. Welcome to the world of financial gambling at its best.

 

The problem we face today is the Haram financial foundation of modern economics in the long absence of Islamic Jurisprudence.o The Challenge today is how to interact with a world economy that is mostly based on several forbidden principles such as GHARAR ( Lack of transparency), Riba ( Interest), Taxaayul ( Scams) etc.

 

 

Nur

 

2010 eNuri Financial Advisory

Allah is the owner of wealth,

Man is entrusted to manage wealth

for the well being of all of Mankind

Meaning of some verses in Holy Quraan

[Rain]

informative. looking forward to the next piece.

i wonder, are there any halal billionaires out there?

[Showqi]

Maaliyadu mar haday Milyan(US $) kor u dhaafto. Ooy interest, investment iyo stocks faraha la gasho. Lafayarooooooooow tii Xalaal ahayd waa loo yaaba.

[Rain]

Allaahumma akfinii bihalaalika ‘an haraamika wa aqhninii bifadlika’amman siwaaka

[Nur]

LafaYare bro.

 

I have concluded my write up, but the topic is far from being complete, let me know if it made sense to you.

 

 

Nur

[Rain]

Yes Nur, it made sense. following your link i came across this character

[Nur]

* POLITICO

 

* Israeli, American indicted for gun running to Somalia

 

By: Laura Rozen

 

Israeli, American indicted for gun running to Somalia - Laura Rozen: Israeli, American indicted for gun running to Somalia

June 28, 2010

 

A federal grand jury in Miami, Florida has indicted an Israeli defense consultant and an American citizen of conspiring to transfer hundreds of AK-47s to northern Somalia.

 

Chanoch Miller, an Israeli aeronautical engineer who previously served as an executive with Israel’s Radom Aviation, was indicted on June 17, 2010 on seven counts of conspiring to export defense equipment to an embargoed nation, Somalia, money laundering, providing false end user certificates, and related charges.

 

His co-defendant’s name is redacted in the indictment but is described as an American citizen.

 

Beginning in April, according to the indictment, Miller conspired with his American co-defendant to find an air cargo service to fly hundreds of AK-47s from Bosnia to the northern Somalian city of Banderal, using false end user certificates of Chad, in violation of U.S. arms export control laws. Somalia is under a UN arms embargo. But the transport services source they contacted turned out to be an informant for the U.S. Customs and Immigrations Enforcement (ICE) agency, the indictment describes.

 

“On April 15, 2010, [redacted name of co-defendant] sent an email to an Immigrations and Customs Enforcement confidential informant (hereafter CI) and asked if CI had Antonov 12 or similar line [aircraft] available for two charter flights from Bosnia to Africa to lift 12 tons on each flight for two round trips, landing in Africa “to unload mil equipments” and return to Bosnia for a second trip,” the indictment reads.

 

“On April 21, 2010, [blacked out] sent an email to the CI and advised the CI that the cargo would be Boxed AK-47s, 6 to 7.6 tons, and that the CI could choose to use AN26 or AN12 aircraft from Tuzla Bosnia to Banderal, Northern Somalia and that payment would be made by wire transfer or cash before departure.”

 

“On April 21, 2010, [blacked out] sent an email to the CI and advised that he has enough cargo for 100 flights if the first flight is successful.”

 

“On April 28, 2010, [blacked out] sent an email to the CI and also sent a copy of the email to CHANOCH MILLER and advised that CHANOCH MILLER, who was the buyer in Israel and who would sign the contract and pay the CI, had accepted the price at least verbally but was hoping to get the first flight done sooner.”

 

Miller arranged through the same confidential informant to purchase 700 AK-47s, 200 in the U.S. and 500 in Panama, and fly them to Somaliland earlier this month. On June 15, 2010, the indictment states, Miller wired $116,000 from an Israeli bank to a Broward County, Florida Wells Fargo branch to pay for the air services including a $2,000 commission for his co-defendant, the indictment said.

 

The case against Miller was brought by the United States Attorney for the Southern District of Florida Wifredo Ferrer and Assistant U.S. Attorney Michael Walleisa.

 

Miller was arrested on June 18th, court documents show, and was due to be arraigned today. The indictment of his co-defendant is sealed, until his arrest or August 9, 2010, whichever comes first.

 

In February, Somaliland local press cited an Israeli foreign ministry official that Israel was considering recognizing Somaliland as an independent country, but the official has denied ever making such a statement and said the local media had made it up.

 

"It's pure fabrication," Israeli foreign ministry spokesman Yigal Palmor told POLITICO Monday. "A few months ago, someone brought my attention to the fact that a pro-Somaliland website quotes an interview I supposedly gave to the Israeli paper Haaretz in which I supposedly said a few things. I never spoke to Haaretz on any subject to do with Somalia or freedom of Somaliland. It's pure fabrication. And you know what, the funniest thing, after this is published, and circulated on pro-Somaliland websites, pro-Somaliland activists are asking me to be their friend on Facebook."

 

Somaliland, a former British colony, is strategically located in the Gulf of Aden. The breakaway republic held elections on Sunday which international observers declared free and fair.