Critical evaluation of the compliance of online Islamic FOREX trading with Islamic principles

Purpose - – This study aims to evaluate the compliance of online Islamic FOREX products with Islamic jurisprudence principles and determines the degree of similarity or difference between Islamic and conventional FOREX products. Design/methodology/approach - – This study involves the collection and analysis of secondary data from online sources (i.e. four Islamic FOREX Web sites selected on the basis that they appeared on two Islamic FOREX Web site lists) It also undertakes content analysis of the rulings of jurisprudence scholars on one of the Web sites. Findings - – There is no evidence to suggest that the technical processes underpinning current Islamic FOREX products are any different to those underpinning conventional FOREX products. Also there are major contradiction and ambiguities in the rulings offered by the jurisprudence scholars about the permissibility of the products. Research limitations/implications - – The study relies on the analysis of secondary data. Further research that will involve interviews with banking industry employees in both conventional and Islamic banking sectors would provide a better understanding of: how financial products are created and managed and the role of bank regulations in creating and managing different financial products. Practical implications - – It would seem that Islamic FOREX is simply rebranding of conventional FOREX. The paper calls for a modern-day definition of usury (riba). Social implications - – The way Islamic FOREX is marketed today to online users as synonymous with gambling, and, although branded as Islamic, the actual technical processes that underpin Islamic FOREX products are the same as conventional FOREX products and therefore not compliant with Islamic principles. Originality/value - – This research explores the marketing of Islamic FOREX products.