Stock Yield Enhancement Program allowed or not?

đź’° Everyday Islamic Finance Savings & Investing
#1

You can join the IBKR Stock Yield Enhancement Program (SYEP) and loan your fully paid shares to IBKR to earn extra income. If IBKR borrows your shares, you will receive 50% of the market-based rate. Your loan is to IBKR, which means IBKR bears the risk if the other traders do not return the borrowed shares to IBKR. Joining SYEP does not limit your ability to sell your shares whenever you would like. You may opt out at any time.

Is this halal?

#2

It is not. You are participating in a haram transaction which makes it haram as well.

#3

Thanks for that

May I query is it the lending of shares that makes it wrong or receiving income from what you’ve loaned out. Just trying to better understand what makes it haram?

Thanks

#4

What is landing of shares?
You need to ask a scholar about that. Brokers and banks are creating spectacular number of new ways of creating profit and money that most of them don’t pass the islamic criteria.
A halal financial transaction must avoid riba (interest), gharar (excessive uncertainty), haram activities, and ensure mutual consent, fairness, and risk-sharing. Apply this and you will understand.
In your case, many things but just to cite the fact that your money will generate riba money is a red flag without mentioning the gharar.
Wa Allahu Aalam

#5

Look at the definition: i have put my comments between bracket:

Interactive Brokers’ Stock Yield Enhancement Program (SYEP) allows eligible clients to earn extra income by lending their fully-paid shares to others for short selling. : (short selling is haram)

(Also lending is a contract between you and ibkr: there is gharar because many things are unknown and not predetermined.)

(Also many contract in one contract. Your shares will be lended to a third party which is considered as another contract.)

IBKR borrows these shares, posts collateral (like US Treasuries or cash) to secure the loan, and then relends them to traders.
(Many contracts of what ibkr doesn’t own!)

In return, IBKR pays the client interest (which is riba) on the collateral, based on market rates, as long as the shares are on loan.

#6

Yassine, how would you analysis applied to halal mortgages transacted by banks be evaluated?