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Subject : Ruling on Marketing for Brokerage Firms

Fatwa Number : 3583

Date : 17-08-2020

Classified : Current Financial Issues

Fatwa Type : Search Fatawaa

Question :

What is the ruling of Sharia on marketing for a brokerage firm (See attached copy)?

The Answer :

All perfect praise be to Allah, the Lord of the Worlds; may His blessings and peace be upon our Prophet Mohammad and upon all his family and companions.

Having reviewed the terms and the working manual of the marketing firm referred to in the above question, it was found out that it is a brokerage firm that attracts clients trading in the capital market and doesn`t sell any products to them. Rather, any client that manages to attract other clients receives a commission.

It is evident that the above marketing system is actually marketing on commission. In order for this system to be considered permissible, the following conditions must be met:

First: Refraining from fraud, deceit and inflicting harm on others.

Second: Following the rules of transacting in financial markets, such as  avoiding margin and bond trading. Observing rules of exchange when trading in currencies, gold and silver, in addition to following the rules of trading in stocks.

Third: Avoiding the suspicion of network marketing. Therefore, it isn`t permissible for the marketing firm to stipulate that the client pays a certain sum or buys one of its products or services.

Once these conditions are abided by, it is permissible to deal with the above firm or else it isn`t. And Allah the Almighty knows best.



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