I came across a CFD that is shariah compliant from Anglorand, perhaps you are familiar with that company and product and can shed some light on it.
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh
The term ‘CFD’ which stands for ‘contract for difference’ consists of an agreement (contract) to exchange the difference in value of a particular currency, commodity share or index between the time at which a contract is opened and the time at which it is closed.
For example, if one buys a contract for $14 and sell at $16 then one will receive the $2 difference. If one buys a CFD at $10 and sell at $8 then one pays the $2 difference.
A CFD is a tradable instrument that mirrors the movements of the asset underlying it. It allows for profits or losses to be realized when the underlying asset moves in relation to the position taken, but the actual underlying asset is never owned.
In a ‘Contract for Difference’ (CFD), the client does not become the owner of the shares. In fact, he does not receive any asset or service in exchange for the money he invests. He may gain money or he may have to pay more money (and also lose the initial amount) based on the difference of the value of the shares between the time the CFD contract opens and closes.
CFD trading resembles Qimaar (gambling), in which two people agree that whoever loses the bet on an uncertain outcome, will pay the other a specific amount.
Additionally, interest is applied daily to open CFD contracts by many CFD providers.
Moreover, CFD Trading consists of gharar (uncertainty) since the dividends of the underlying contract are based on speculation.
Furthermore, one never owns the underlying assets of the traded shares. Hence CFD Trading is impermissible since the essential condition of milkiyyah (ownership) is not fulfilled under CFD Trading.
In short, CFD contracts contain elements of interest, gambling, Gharar and other impermissible elements. It is therefore, not permissible for a Muslim to trade in conventional CFD’s.
With regards to your specific question, we have browsed through the Anglorand CFD Presentation and Website. However the information provided is unclear and ambiguous. Kindly submit the actual CFD Contract for our perusal in order for us to issue a specific ruling.
And Allah Ta’āla Knows Best
Checked and Approved,
Mufti Ebrahim Desai.
2لأن القمار من القمر الذي يزداد تارة وينقص أخرى ، وسمي القمار قمارا لأن كل واحد من المقامرين ممن يجوز أن يذهب ماله إلى صاحبه ، ويجوز أن يستفيد مال صاحبه وهو حرام بالنص ( رد المحتار: ج 9 ص 665 دار المعرفة )