Is buying using unsettled funds halal?

When I initiate a deposit request from the bank account to the brokerage account, it takes a couple of days to arrive. However, the brokerage gives immediate “buying power” allowing the use of the funds before settled. Is it halal to use these funds immediately to invest?

As-salamu Alaykum Wa Rahmaa Tu’lahi Wa Brakatu,

I think it depends on style or method in which the broker is settling.

If they are giving you funds to purchase whilst the transactions settles and the funds have left your account, I would say it should be fine on the basis that an agreement has been settled in terms of ownership of money.

For example:
Bank A has taken £100 from you
Bank A has initiated a transfer
Broker B has received and agreed the transfer
Broker B has allowed you to invest whilst the transfer occurs.

However, if the broker has given you funds or “buying power” as an unsettled load such that they have not received or finished an agreement but expect the funds then I would say no on the basis it’s not your money yet but just a loan/borrow.

For example:
Broker B has received notification that you want to deposit
Bank A has not yet sent the funds or initiated a transfer
Broker B has given you funds expecting Bank A to send

The final case maybe a gesture of good will where they allow you to spend money whist things are happening in the background, I don’t expect this to be the case.

What you have to find out is if the buying power or funds given to you preemptively or a loan as an expectation.

I generally think the first case might be more likely as bank transfers in general are never done immediately and often take a few hours, days, or weeks to complete in real life.

Jazakhalla khairan