Islamic Forex

Islamic finance was born in the 70′s with the intention of structuring banking and financial products compatible with the precepts of the Koran. In the recent years, and despite the Dubai crisis that has shaken this model, the Islamic finance (which can be broken on almost all financial markets) is attracting more and more players who are driven by religious motives or by financial gain prospects.

The United Kingdom, and its financial heart, the City, are among the Western pioneers of Islamic finance as the country has  started  in 2004 to integrate Islamic financial products in its portfolio. In England, the movement is much slower, since 2008 this financial model has started to be known there, while the model of financial capitalism is challenged by the mortgage crisis, the French financial actors start to be interested by  this phenomenon.

What Are The Basic Principles Of Islamic Finance?

Islamic finance is based on two fundamental principles:

1. Prohibition of the payment and receipt of all forms of interest (RIBA)

The word “Riba” means in Muslim law, any benefit or surplus received by one of the parties without an acceptable and legitimate consideration in terms of Sharia. The Riba takes two main forms, the Al-Riba-Alfadl and Annassia. The last one refers to the perceived oversupply at the payment of a due, the payment  mode was made as a condition expressed or implied in the contract due to the delay granted by the deferred settlement. This is the most common type in society, including through credit, loans and investments offered by banks and traditional funding agencies.

2. Sharing profits and risks in business

Forex Islamic Marketing Trick But A Market Niche

With the brokers offering english speaking support, Islamic finance has emerged during the period 2008/2010. Many brokers have indeed benefited from investor mistrust towards the financial capitalism crisis to propose alternatives ,considered seemingly  less risky, as Islamic finance. However, this movement has been attenuated gradually as the challenged capitalism weakened. However, Islamic finance, particularly in the field of forex, responds in english to a real and growing individuals demand  who, for some, want to relive the religious principles of Islam. The Islamic forex, especially after beeing  a tip commercial for brokers, now it  appears as a niche market.

What Is The Main Advantage Of Forex Islamic Accounts?

The main difference between the Islamic forex and “normal” forex  is the fact that there is no swap in Islamic forex accounts in accordance with the Koran. In other words, the swap, which corresponds to the differential rates of received and paid, and that takes place every evening at 23h, is not taken in Islamic forex account.

What (s) Brokers Choose To Open An Islamic Forex Account?

As explained before, many Forex brokers offer Islamic accounts and somes even have opened liaison offices or representation offices in the Gulf countries in order to impose this new market segment. Although this movement towards the Gulf of brokers and banks have experienced a brake since 2010, with the closure of offices of banks or brokers in this region, there are still many Forex brokers that offer affordable accounts compatible with the precepts of the Koran. Among them,  we find the investment plateform OlympTrade, broker Etoro, Forex4You.