Forex trading and leverage

A question on forex trading where some companies say leverage is not a loan and charge no swap fees, in which Jordan's General Iftaa Department answered that leverage is a loan that brings a benefit to the lender, so any transaction involving it is not allowed. ¹

The questioner said some companies told him leverage is not a loan but a tool that magnifies capital, and that they charge no swap fees; he asked about trading forex. ¹

The Department answered that leverage is, in fiqh terms, a loan from the broker to the trader; with interest it is clearly riba, and without interest it is still riba, because the broker gains the agreed commission on every transaction and because it combines a loan with a sale. ¹ It said leverage has a real effect: it multiplies the trader's capital, profits and risk, and earns the broker more commission than if the trader used only his own capital, so it is not a notional sum. ¹ It concluded that no transaction involving leverage is allowed, since it is an interest-bearing loan, and that this alone suffices to rule the transaction asked about forbidden. ¹

Jordan's General Iftaa Department published this fatwa on aliftaa.jo as no. 3871, dated 5 May 2024. ¹ The museum records this text as a historical document attributed to the body or scholar that issued it; it issues no ruling of its own.