I buy and sell stocks online on the same day, is it permissible?

Bismillahi Ta’ala

Walaikum Assalam Warahmatullah

At the outset, this answer will not address short-selling. Instead I will be addressing day-trading wherein a stock purchase is sold on the same day after it has been acquired. Also, it goes without saying that the stocks need to be Shariah Compliant themselves.

In the olden days the day-trading was disallowed because the possession of the stock and its certification would not transfer to the purchaser, rather it had to be issued and then once all the finalization was done, it would be mailed out to the buyer. So, although the ownership of the share would be transferred, the possession would take days or even months to physically come to the buyer.

This has changed overtime due to advancement in technology, reducing the time a share would need to be registered and finalized and be considered under the buyer’s possession along with all its risks.

As a principal, as long as the ownership of the stocks purchased along with its possession comes under the buyer’s name, the buyer may sell it onward as his commodity. Hence, once purchased, shar’an a stock may not be traded until its settlement is finalized.

The reality on the ground is, that although the process time for above ownership and possession may have been reduced considerably, the stocks market has its own rules and regulations which sets a limit on such acquisitions. At this time, as per my understanding Canadian Securities Administrators (CSA) sets T+2 settlement cycle for equity orders. This means that regardless of when the security (stock) is purchased it will take two business days for the settlement to take place.

In light of this day-trading is still non-shariah compliant, and impermissible.

Wallahu A’lam

And Allah Ta’āla Knows Best
Mufti Faisal al-Mahmudi