What is the Islamic position on CFD Trading?

Q: What is the Islamic position on CFD Trading? I know Spread Betting is not allowed and is fundamentally different to CFD Trading as the former is a synthetic market that can be manipulated by the market makers.

Additionally, with regards to ‘owning the stock’, an individual does not own the stock if bought via a stockbroker but is the beneficial holder and thus still receives dividends. CFD Trading is the same in that the individual does not ‘own’ the shares but still receives dividends. I know buying stocks and shares is permissible and thus come to the same conclusion with regards to buying and selling using CFD Trading, which allows leveraging.

الجواب حامدا ومصليا ومنه الصدق والصواب

A:CFD trading is not permitted.  Fundamentally, one does not own the product which is an essential requirement in order to trade.  By definition, there is no intention to ever possess or own the commodity with the interest of the traders extending only to the exchange of the opening and closing price of the commodity.  Leveraging too is not permitted.  CFTD trading is different from the permissible trading of shares wherein one secures ownership of the underlying share and then is able to sell on once delivery of the share has been secured.

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