Franchise of a Share Trading Company
Posted: 28 Muharram 1431, 14 January 2010
This is about taking a sub- brokership (also known as Franchiser) in the Share Trading Company.
In the Sub-Brokership we run a business where the share traders open there accounts and trade (Buy/Sell Shares, Futures, Options) through us. These traders are called Clients. We get a percentage of the brokerage fee as agreed between us and the Share Trading Company.
Kindly tell me is this kind of business is permissible in Islam…
A.The brokerage fee earned from permissible transactions is permissible. However, earning a brokerage from impermissible transactions such as the sale of futures, options, the sale of shares that have not yet been transferred etc, or from the sale of shares which are prohibited, such as the shares of haram industries, conventional banks, conventional insurance companies etc, is impermissible and such earnings are prohibited in the Shariah. Hence, one must consult closely with competent ulama and transact carefully to ensure that one's earnings are indeed permissible and not tainted with haram.
And Allah Ta'ala Knows Best