Best 6 Islamic Accounts & Swap Free Brokers 2019

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What is a Swap Free Account?

A Swap-free account or Islamic account is a type of trading account which does not involve interest for holding the position overnight. Swap-free accounts have been introduced recently to facilitate Muslims as Islamic Shariah principle forbids Muslims from paying interest on a loan or paying interest in the form of a swap.

The broker is not eligible to deduct any rollover interest swap from Islamic accounts. Consequently, the result of trading solely depends on exchange rates during the particular time frame. The broker, alternatively, uses different strategies like charging fixed commission combined with widening the spread rather than deducting a portion of the rollover interest swap.

Although there are several swap free brokers available in the market that are offering Islamic accounts, we have selected 7 best brokers that are providing best Islamic accounts. Below are the criteria we used for brokers selection.

What is Forex Swap? A swap is a rollover interest or commission charged by a broker for extending a trader’s position overnight.

How We Rated these Islamic/Swap Free Brokers

The role of brokers in forex or stock market trading is significant. This is because their trading platform along with other key factors plays a key role in increasing profit-making opportunities. Following are major factors that we used for selecting the best broker for Islamic accounts:

  • Regulation and compliance
  • Islamic account according to Shariah Law
  • Spreads and commissions
  • Customer support
  • Number of instruments
  • Payment options
  • Educational material
  • Trading platform interface
  • Trade execution

Top 6 Islamic/Swap Free Brokers 2019

1. IC Markets: The Best Islamic/Swap Free Broker for 2019

IC Markets is among the brokers that offer Islamic accounts to traders according to Shariah law and Islamic principles regarding interest payments. In addition, their Islamic accounts contain all the features and trading tools that they offer on other accounts.

IC Markets does not make debit or credit transaction related to interest on a swap free account due to the religious belief of Muslims. They offer swap free option on both its True ECN and Standard accounts.

Account Features at a Glance
Regulations        ASIC
Type      ECN
Minimum Deposit            $200
Headquarter      Australia
US Customers   No

 

The broker is committed to offering superior trading conditions to its clients. IC Markets Islamic account provides state of the art trading infrastructure along with better execution speeds – which enable Muslim traders to have a competitive edge.

IC Markets is one of the best Islamic/swap free broker. This is because it charges only a small fixed fee for overnight positions. However, fee rates & holding period could change according to market conditions.

Founded in 2017, this platform is owned and operated by International Capital Markets PTY. This platform is reliable because of ten years of history in online trading. It is licensed from the Australian Securities & Investments Commission (ASIC).

Pros:

  • Outstanding trading platform
  • The wide range of tradeable products across global markets
  • Very safe, secure and highly regulated
  • Excellent customer support and educational resources

Cons:

  • No bonuses or promotions

Visit ICMarkets

 2. XM: The Islamic/Swap Free Broker According to Shariah laws

The XM is an Islamic/swap free broker which fulfills all the conditions of Shariah laws. Indeed, its forex Islamic accounts are quite different from other forex brokers. This is because they do not charge additional fees and commissions compared to most of the other brokers who replace additional fees by increasing the spread on Islamic accounts.

Account Features at a Glance
Interest No interest/swap charges on overnight positions
Spread No spread widening
Position Time Positions can be held with no time limit
Leverage Leverage up to 888:1
Trading Conditions Same trading conditions compared to other trading accounts
Trading Platform Free and instant access to all trading platforms
Customer Support 24/5 dedicated support from your Client Account Manager

 

The majority of Islamic/swap free brokers generally transfer interest charges into a different type of fees, which is still basically a charge that covers the interest. This process is also called by the name of swap-free in disguise. XM, on the other hand, is strongly against these types of practices. This broker sticks to ethical and fair trading conditions.

It’s really easy to create an Islamic/swap free account on XM platform. The account opening is consisting of three steps: open a trading account with XM, validate your account and request an Islamic account. Once the management receives the request, they will provide you a swap-free status.

Pros:

  • No up-front commissions
  • No re-quotes, no hidden costs
  • 100% real-time market execution

Cons:

  • MT4 and MT5 proprietary trading platform
  • Live Chat

Visit XM

 3. Pepperstone Group: The Most Famous Australia Based Brokerage

Pepperstone Group is one of the most famous Australia based brokerage firm which offers an Islamic/swap free account to Muslim traders. Established in 2010, the broker offers a highly competitive trading platform with multiple assets including forex, index instruments, and commodity.

Account Features at a Glance
Spread Type Straight Through Processing | No Swaps
Average EURUSD Spread 1.0 – 1.2 pips
Min / Max Trade Size 0.01 lots / 100 lots
Commission $0
Min Account Opening Balance $200USD or equivalent

 

Pepperstone’s swap-free account is designed according to Shariah laws that do not contain paying or receiving any swaps. Their Islamic trading account is free of interest; the account allows traders to take full benefit of Pepperstone’s innovative trading technology and strong liquidity. This swap free broker takes admin fee on trades that prolong for 2 days.

Investors admire its user-friendly desktop and mobile-based platforms combined with a strong education system and professional customer service.

Pros:

  • Website well-organized and easy to navigate
  • Cryptocurrency trading
  • Excellent trading guides

Cons:

  • Conditional orders lack sophistication
  • No single stock CFD coverage
  • Scattered and hard to find fee disclosures

Visit Pepperstone

4. AvaTrade: Islamic Account But With a Few Restrictions

AvaTrade stands among the Islamic/swap free brokers who offer services according to Islamic laws. Customers who hold Islamic trading account on AvaTrade platform will not be charged daily swaps. Instead, they replace swap fees with daily administration charges.

Account Features at a Glance
Islamic Account Yes
Instruments       CFD, Forex, Crypto
Demo Account  Yes
Min. Deposit      $100
Regulation CBoI, ASIC, FSB
Mobile Apps iOS and Android

 

With the aim of providing opportunities to grow the capital, the broker offers a strong trading platform for Muslims respecting their belief and the rules of Islam.

The broker, however, placed some restriction on Islamic accounts. On cannot trade cryptocurrency on Islamic accounts. The traders have to end Islamic account if they want to trade cryptocurrencies. Traders are not eligible to trade certain forex pairs on Islamic account.  These pairs include ZAR, TRY, RUB, MXN pairs. In addition, the broker would widen the spread on Islamic accounts.

Pros:

  • Free Online Trading Coach
  • Strong Education Material
  • Number of assets
  • Active Customer Support Service

Cons:

  • Low Leverage
  • Higher Fees
  • Wide Spreads

Visit Avatrade

5. XTB – Offering Several Instruments on Islamic/Swap Free Account

Established 14 years ago, XTB is the largest stock exchange-listed broker that offers more than 1500 instruments to traders. It is one of the most popular forex and CFD brokers with offices in several countries such as Poland, the UK, Germany, Turkey, and France. It is regulated by the Financial Conduct Authority and licensed by CySEC. According to the regulator’s policies, the broker keeps all the client funds in a separate bank account.

XTB is an Islamic/ swap free forex broker who permits Muslim traders to trade more than 1500 instruments based on Shariah laws. Traders with an Islamic account can trade forex, commodities, indices, stock CFDs and ETF on this platform. They also offer all the trading tools and platforms that are available to other account holders.

Account Features at a Glance
Islamic Account Yes
Maximum Leverage 1:200
Minimum spread 0.35
Navigate balance protection Yes
Minimum order 0.01

 

It’s trading platform has a fairly standard interface. The watchlists, menus, and charts make its platform even more attractive for traders. The broker also provides screening tools, sentiment indicators, and heatmaps along with other helpful information. Traders can reach customer service during the business hours via phone call and chat room.

The broker offers automated trading to an Islamic account holder combined with free account setup. They also provide access to xStation & MT4 trading platforms and these platforms are available on web and mobile. XTB management does not take a commission on forex, indices, and commodities, but Islamic account holder are required to pay commission from 0.08% per lot for Stock CFDs and ETF CFDs trading. These account holders are not eligible for cryptocurrency trading.

Pros:

  • Fast deposit and withdrawal
  • Fast and user-friendly account opening
  • Good research tools

Cons:

  • Limited product portfolio, mostly CFD and FX
  • Sales team can be pushy
  • Missing 24/7 customer support

Visit XTB

 6. OctaFx: The Award Winning Islamic/Swap Free Broker

The OctaFx aim of providing the best trading opportunities that meet the most complicated requirements of the clients led it to win the Best Islamic Account Forex Broker 2015 award. The broker seeks to offer the best Islamic accounts which help in bringing new trading opportunities and convenience for the Muslim clients.

Account Features at a Glance
Founded 2011
Regulators CySEC
Leverage 1:500
Payment Methods Credit cards, wire, neteller, skrill
Platforms MetaTrader 4, MetaTrader 5, cTrader
Dealing Desk No

 

100% compliance with Islamic laws is one of the best features of OctaFx Islamic accounts. In addition, its other features including one-click registration and a limited number of documents for identity proofs are increasing traders confidence on this platform. They do not impose swaps on Islamic accounts during a rollover. However, they take a fixed fee on these accounts. This fee does not involve interest and primarily depends on the direction of traders position.

Traders can use MetaTrader4, MetaTrader5, and cTrader through Islamic accounts. One can easily open an Islamic/swap-free account on OctaFx platform. The account opening process is simple. Traders just need to click the “Swap-Free” box if they want to open Islamic account.

Pros:

  • Used by 300,000+ traders
  • Established in 2011
  • Regulated by Unregulated
  • Min. deposit from $5

Cons:

  • Doesn’t offer VPS
  • Not FCA Regulated

Visit OctaFX

FAQs

What is Swap-Free Account?

Islamic accounts/swap free accounts are trading accounts that are designed to facilitate Muslims in forex and other trading instruments. These accounts do not involve interest that brokers generally charge for holding position more than one day. Instead, Islamic/swap free brokers charge a fixed amount for overnight positions. In some cases, swap free brokers charge the fee in the form of wide spreads on Islamic accounts compared to other accounts.

What is a Swap?

A swap is a derivative contract which allows two parties to exchange liabilities or the cash flows from two different financial instruments. The majority of swaps contain cash flows according to a notional principal amount including a bond or loan. The most well-known type of swap is an interest rate swap. These swaps never trade on forex or stock exchanges. Instead, swaps are generally over-the-counter contracts that are mainly between financial institutions and businesses.

What is a Carry Trade?

Whether you are trading stocks or commodities, carry trade is one of the most important trading strategies. However, this strategy is popular in currency trading. Carry trade means buying a high yielding currency and funding it with a low yielding currency. The most famous carry trades strategies contain buying high yielding currency pairs like the New Zealand dollar/Japanese yen or Australian dollar/Japanese yen. This is because the interest rate spreads on these forex pairs are generally very high.

Is Forex Trade Forbidden or Permissible in Islam?

With the substantial growth in trading markets along with the innovation of online trading, more and more people are seeking to make their career in financial markets. However, the majority of Muslims are yet unaware of the real status of trading in their Shariah laws. Forex trading is forbidden in Islam as it involves interest or swaps. Therefore, many forex brokers have recently developed a separate account for Muslim which does not contain swaps or interest.  Forex trading without the involvement of swaps is permissible in Shariah.

Is Riba or Interest is forbidden?

Yes, in Islam, Riba or interest is strictly prohibited. Riba is considered a major sin in Islam. In Islam, any payment or credit in the form of interest is forbidden. For instance, if a person in need was to approach a Muslim for the loan, the Muslim is obliged to provide the loan without charging any interest on the loan.

Islamic style of business and living is quite different from other religions. This difference is also evident from Islamic banking which does not involve any interest on business loans, housing or any other form of a loan or on saving accounts. Islamic banking transactions are processed using two major types of arrangements called Mudharabah and Musharakah.

What are Mudharabah and Musharakah?

A Mudharabah is a type of agreement which is beneficial for both parties. This agreement doesn’t contain any interest in the transaction. Instead, a bank and the depositor, enter into a profit-sharing arrangement. This way both parties share profit on the transactions according to the terms of the contract. These types of contracts are also called as a partnership. If the transaction fails to generate profit, the depositor is also liable for a portion of the losses.

Musharakah is an Arabic origin word, which is always used for sharing something. In business and trade, this word means a partnership, which makes both parties liable to share profit and losses according to the agreement between them.

 

 

 

Remember, all trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.

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20 thoughts on “Best 6 Islamic Accounts & Swap Free Brokers 2019

  1. Hello there. I’ve just signed up on XTB but I don’t know what to do next. At what point should I select an Islamic account? I am quite confused.

    1. Hello Yasmin. Thank you for getting in touch. You should select your account preference once you’ve signed up. All you have to do is create an account on the exchange, and then look for information on the various account types and select the Islamic Account. If you have trouble with that, we suggest contacting a member of staff, they will perhaps do it for you, or at least give you some detailed information on how to do it.

  2. Will I be able to have access to the same number of assets that I would if I was trading with a non-Islamic account?

    1. Hello Ali. Thank you for your question. Yes, absolutely. If for example XTB offers more than 1,500 assets to trade with, then with an Islamic account you will be able to trade with all these assets. Please remember that diversifying your trades is extremely important because it will allow you to limit your losses. Trading with only one asset is much riskier than trading with many assets so if an exchange offers a good variety, it is definitely a good opportunity to diversify as much as possible.

  3. Hello there. I’ve been thinking about creating an Islamic account on one of the exchanges you listed but I don’t think I can afford any of them. I only have a budget of $100 for the initial deposit, I cannot spend more. Does any of these require this amount or perhaps lower?

    1. Hello Amir. Thank you for your question. The platforms with the lowest deposits are Avatrade, XM and OctaFX, all requiring minimum deposits of $100. IC Markets and Pepperstone request a minimum of $200 whilst XTB and eToro require at least $250. Please keep in mind though, that while some of the deposits requested by the platforms are lower, they might have higher fees than the platforms with higher initial deposits. So we do recommend looking into the fees charged by each of these platforms if your aim is saving money.

    1. Hello Alan. Thank you for your question. A Mudharabah refers to an agreement that both sides can benefit from. There basically no interest involved in the transaction. What happens is that the bank and the trader share the profit made during transactions, so if the trade does not make profits, then both the bank and the trader suffer the losses. A Musharakah is basically the same thing. It refers to a partnership between two sides that share profits and also share losses according to their agreement.

    1. Hello Yosuf. Thank you for your question. Yes, you will certainly be able to trade in demo mode even if you have an Islamic account. Be aware however, that not all exchanges offer demo accounts, so if you do not have access to demo trading, it probably means that the exchange does not offer it at all. It is definitely a good idea to try trading in demo mode first, so we do recommend trying to look for an exchange that offers demo trading as an option.

    1. Hello Julie. Thank you for your question. Yes, forex trading is not allowed according to Shariah laws because it involves swaps. According to those regulations, Muslims are not allowed to pay interests on a loan or in the form of a swap. That is why the swap free or Islamic accounts were created, because interest is not charged for positions held overnight. Instead of that, users are charged fixed commissions and there also are widening spreads to be aware of. Forex trading that does not involve swaps is permitted according to Shariah laws.

  4. Hello there. I was considering creating an account on Pepperstone but I haven’t done it yet because I am scared of losing all my money to a hacking attack. What should I do if that were to happen?

    1. Hello Simon. Thank you for your question. That is understandable. Platforms of this kind are often targets of hacking attacks and their security measures are not always efficient, so having your funds stolen be hackers is a possibility. The best thing to do before you create an account, is to check if Pepperstone has a refund policy in case of hacking attacks. To do that you can go on their website and have a look through their legal section or their terms and conditions. If not, you can directly contact customer support asking if they have a refund policy and wait for their answer before creating an account.

  5. Hello there. I have been trying to decide on which of the exchanges you listed on this review to open an Islamic account on but I haven’t been able to make up my mind yet. Would you recommend one of these in particular? Thanks!

    1. Hello hms891. Thanks for getting in touch. It is difficult to recommend one of these brokers in particular because as you may have already guessed, each of them has its own strengths and weaknesses. I would say that two of the brokers that we consider to be excellent when it comes to Islamic accounts are eToro and ICMarkets. They are perfectly in line with the Shariah regulations on overnight interests. On top of this, they have particularly low fees, they are known to be very secure and have user-friendly trading platforms. Definitely recommended!

    1. Hello Ahmed. That is definitely a good question. First of all, the sign up process on eToro is made very easy and straight forward. It offers lower fees, a great asset variety, a vast variety of payment methods available, fast deposits and withdrawals and it offers the copy trading option. The copy trading feature allows you to copy the trades placed by the top ranking investors using eToro as a trading platform. The feature is ideal for traders with little or no experience trading online. The platform is also in perfect line with Shariah Laws because it does not charge interests on positions held longer than 24 hours. You can find out more about eToro as an platform on our eToro review page.

    1. Hi there. Thank you for getting in touch. Islamic account is the same as swap-free account. They are basically accounts thought to facilitate Muslims’ access to the world of online trading. What I mean is that according to Shariah laws, interests on a loan or in the shape of a swap cannot be paid. That is why with a swap-free account you would not be paying interests for holding a trading position overnight. You will instead will be charged fixed commissions or there will be higher spreads on assets. I hope that answers your question.

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