XM Islamic Account Review South Africa – Revealed ( 2020 )

 

XM.com Review in south africa
 

XM Islamic Account Overview

 

According to research in South Africa, XM is a broker based in Australia, Cyprus, Belize, and the United Kingdom with respective regulation and authorization through ASIC, CySEC, and IFSC.

 

XM offers comprehensive and competitive trading conditions with minimum deposits which start from as little as $5, proving traders with access to a wide variety of financial instruments including:

  • Forex
  • Commodities
  • Cryptocurrency
  • Stocks
  • Shares
  • Indices
  • Metals
  • Energies, and
  • CFDs

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XM facilitates the trading of such financial instruments through favourable trading conditions in a choice between three account types, each tailored to cater for traders with differing levels of experience, skills, and knowledge.

 

These main accounts are:

  • Micro Account – with a minimum deposit of $5, spreads from 1.0 pips, $0 commission charges on trades and leverage up to 1:888.
  • Standard Account – with a minimum deposit of $5, spreads from 1.0 pips, $0 commission charges on trades and leverage up to 1:888.
  • XM Zero Account – with a minimum deposit of $50, spreads from 0.0 pips, commission charges of $0, and leverage up to 1:888.
  • Shares Account – with a minimum deposit of $10,000, spreads as per the underlying exchange, commissions of between $1 up to $9 per the underlying exchange and unfortunately, this account does not offer leverage.

 

XM offers comprehensive and competitive trading conditions, with spreads that are tight, commission free trading on most accounts, and more than adequate leverage.

Although, traders need to take care when applying such high levels of leverage, as it may increase the risks of losses which may exceed the trader’s initial deposit.

Fortunately, XM offers negative balance protection, but despite this, traders can still incur losses which may be equal to the balance of funds in their trading accounts for which XM cannot be held liable.

 

What exactly is an Islamic Account?

 

An Islamic Account, for the greater part as offered by most brokers, is not a standalone account, although some brokers dedicate one account to being an Islamic or Swap Free account, in most cases, this is an option offered by especially Forex brokers.

Islamic Accounts are also provided by brokers who serve Middle Eastern clients along with clients from other jurisdictions and offers certain features that are in line with the Sharia law, which prohibits the accrual of interest on funds deposited into the account.

The other important feature on an Islamic Account is that transactions must be settled immediately, requiring that currencies be transferred from one account to the other right after the transaction has been completed and therefore paid for in full. View XM’s Sign up Bonus.

 

There are two key elements of the Islamic law that relate specifically to trading accounts, these elements are:

  • Riba, and
  • Gharar

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Riba is the prohibition of generating money from money, which in this case specifically refers to interest, which is not allowed according to the Sharia law. This type of interest is seen as both unjust and exploitive gains pertaining to trade or business.

Gharar can simply be defined as the act of gambling, which is strictly prohibited by the Sharia law. In addition, the Arabic word also suggest an element which surrounds a certain level of deception through hazardous sales or risky investments.

According to Gharar, the speculation involved with price movements of Forex and CFDs is considered gambling, which refers back to deception, hazardous sales, and risky investments.

 

Which financial activities are restricted and prohibited by Sharia law?

 

Due to the restrictions and certain prohibitions placed on Muslim traders when considering the intricate details involved with trading activities, the following is affected greatly:

  • Overnight rollovers – which involve the incurrence or receiving of swap points on positions that are held open for longer after the trading day has concluded at the New York close at 5 PM EST which is prohibited by the Sharia law.
  • Margin deposits and interest – which involves the accrual of interest on funds which are deposited into the trading account, which is prohibited.
  • Loans – when followers of the Sharia law have funds transferred by either a bank or other financial institution and it involves interest terms, this is prohibited by the Sharia law as per the key element, Riba.
  • Trading on margin – stocks that are traded on margin result in the trader being liable for paying interest, which amounts to Riba, as money is borrowed from the broker to buy or sell such equities, and which is prohibited by the Sharia law.
  • Short sales – which affects mostly shares and involves borrowing and subsequent sale of an asset, which is prohibited.
  • Forward sales – which affects forward contracts as well as the trading of futures contracts which involves the buying and selling of contracts at a future date according to a price agreed upon on the day of entering into such a contract

 

What are the steps involved in opening an XM Islamic Account?

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To convert the trading account into that of an XM Islamic Account, Muslim traders can follow these steps:

  1. Traders can navigate to the XM website and click on the relevant banner provided to be redirected to an online account application.
  2. Traders will need to fill in this brief application and verify their email address through clicking on the embedded link contained in the verification email sent after the form has been submitted.
  3. Traders will also be subjected to a ‘Known Your Client’, or KYC, process which involves the submission of documents to verify the trader’s identity and their residential address.
  4. Once this has been submitted, the account with go through a review process, after which it will be approved, and the trader notified of the outcome.
  5. Once this has been completed, traders can log into their members area and access the request to have their live trading account converted into that of an Islamic Account.
  6. Once the request has been received by the relevant department, the trading account will receive a swap-free status and the trader will be notified via email.

 

Traders need to acknowledge that XM reserves the right to revoke any request to have the live trading account converted into that of an Islamic or Swap Free Account to avoid and eliminate the chance of abusive usage of this account option.

 

What exactly is a Swap?

 

A swap can be defined simply as an agreement into which two parties enter which relates to exchange sequences of cash flows over a set period of time normally at the time the contract is initiated.

During this, there is at least one of the series of cash flows which is subjected to a random and uncertain variable which involves an interest rate, a foreign exchange rate, an equity price or that of a commodity price.

When trading Forex, for instance, there is a limited amount of time in which traders have to close open positions before a certain market closes at a specified time. Should the position remain open, this will attract an overnight or rollover fee, which is a type of interest.

As previously mentioned, Muslim traders who follow the Sharia law are, amidst other activities, prohibited from paying such interest.

To accommodate traders of Muslim faith, that follow the Shariah Law, brokers offer the option of an Islamic Account, or a Swap-Free account so that they would not be exempted from being able to conduct trading activities that is against their religion.

XM offers Muslim traders the option of converting their live trading account, despite the type, to that of an Islamic or Swap Free account to accommodate these prohibitions along with any other restrictions placed on traders due to this law.

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What is XM spread costs on an Islamic Account?

 

XM’s spreads vary from between 0.0 pips on the XM Ultra Low Account and 1 pip on both the Micro and Standard Accounts, with spreads on the Shares Account subjected to the underlying exchange.

Seeing that the Islamic Account is not provided as a standalone account, Muslim traders are not exempted from normal trading conditions such as spreads which do not generate interest, and thus Muslim traders are still subjected to such trading fees.

 

What is XM’s Maximum Trades/Orders on an Islamic Account?

 

The general Order Execution Policy dictates that the maximum positions that may be held open at a single time is 50 on the Shares Account, and 200 on all others. Other than this, there are no maximum trades or orders indicated when trading through XM.

 

What is the minimum deposit amount on XM’s Islamic Account?

 

The minimum deposit amount on a Micro or Standard Account is $10, despite the option of converting the account to that of an Islamic Account, Muslim traders are held by the same requirements pertaining to minimum deposits.

 

Despite converting the live trading account, regardless of the type of account, to that of an Islamic Account, Muslim traders are subjected to the set minimum required deposit amount which is fixed for each trading account, and can be viewed as follows:

  • Micro Account – $5.
  • Standard Account – $5, and
  • XM Ultra Low Account – $50.
  • Shares Account – $10,000.

 

What other features does XM’s Islamic Account have?

 

Despite the fact that the Islamic Account provided by XM is not a standalone account, and it has the same features as other accounts, there are however additional features applied to this account which includes:

  • Zero interest or swap charges applied to overnight positions.
  • Zero spread widening, spreads are fixed.
  • No commission charges up-front.
  • There is no time limit tied to how long positions are held.

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What are the pros and cons of XM’s Islamic Account?

 

Through the provision of an Islamic Account, brokers like XM ensures that Muslim traders who follow the Shariah Law are able to trade Forex financial instruments as well as futures without having to pay any overnight fees pertaining to open positions overnight.

While complying with the Shariah Law, XMIslamic Account holders can enter into trades without having to worry about closing their positions before the trading day ends.

Although, through the option of an Islamic Account, Muslim traders are free from restrictions that would otherwise greatly impact on their trading activities, Muslim traders may be subjected to additional trading and non-trading fees.

However, when converting a XM live account to an Islamic Account, Muslim traders do not pay extra commissions up-front, only the commissions as they are indicated to which all other traders are subjected when trading on the Shares Account.

 

 

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XM AT A GLANCE

Broker’s Name XM
Headquartered UK
Year Founded 2009
Regulating Authorities FCA
Countries not accepted for trade United States
Islamic Account (Swap Free) Yes
Demo Account Yes
Institutional Accounts No
Managed Accounts No
Maximum Leverage 1:888
Minimum Deposit $5
Deposit Options ·         Bank Wire Transfer

·         Local Bank Transfer

·         Credit/Debit Cards

·         Neteller

·         Skrill, and more.

Withdrawal Options ·         Bank Wire Transfer

·         Local Bank Transfer

·         Credit/Debit Cards

·         Neteller

·         Skrill, and more.

Platform Types MetaTrader 4 and MetaTrader 5
OS Compatibility Web browsers, Windows, MacOS, Linux, Android, iPhone, tablets, iPads
Tradable Assets Forex, commodities, cryptocurrency, shares, indices, metals, energies, options, bonds, CFDs, and ETFs
Languages supported on Website 23 Languages
Customer Support Languages 23 Languages
Customer Service Hours 24/5

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Regulated By FSB-SA

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