Trading on the stock markets : trading stocks

Fatawa Question

Salamu Alaikum Jazak Allahu Khairan for answering my previous question regarding "Dealing with Interest". You mentioned that I would find the income from interest a company receives through their revenue or profit / loss statement. Forgive me I am still not sure where to find this. I have reviewed the income statement and do not see anything that clearly indicates interest as an income. If there is a technical financial term for this, I would truly appreciate if you could point me in the right direction. Secondly, and more importantly : I have read most of your Fataawa regarding trading the financial markets (equity, options, futures, forex, etc.), and you have mentioned that in the equity market, as long as the company meets the criteria you have stated ( i.e. industry, debt / equity, income from interest, etc.) then it is permissible to trade, and I have also read others asking you about day trading with cash accounts, and your response has been in the positive. However, although equities are not considered futures contracts, what is one to make of the settlement dates (usually 3 business days-T + 3) that take place after entering and exiting a position ? For example, if I purchased stock ABC today, although it would be credited to my account immediately, my broker would take up to 3 business days to ""deliver"" the shares from the seller I purchased from. So, if I decide to sell my shares sooner than that, is this permissible ? If the stock drops in value and I need to protect my capital, or the stock rises in value and I am ready to take my profit in a shorter period than 3 business days, is this permissible ? Or do I have to wait for the stock settlement date regardless of my open profits or losses before taking action ? The same process takes place with the capital after selling a position-it can take up to 3 business days to settle in the account, in which you can use it to make another purchase. For me, I am using much less capital to trade than my total current account value is worth, but this may change in the future. Again, Jazak Allahu Khairan for your time. Salam

Fatwa

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Publication Date

2007-02-19

Main Subjects

Economics & Business Administration
Islamic Studies

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-785938

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