Islamic scholars and bodies ruling on prop firms.
Who ruled·What they said·Where to read it
Prop firm funded accounts trade leveraged forex, CFDs and futures, which the rulings on leverage rule out. On the paid challenge itself scholars differ, and both views are below.
Last reviewed 23 October 2026.
Rulings and positions
In June 2026 SeekersGuidance answered that trading through prop firms is not permissible. The answer, by Mawlana Ilyas Patel and approved by Shaykh Faraz Rabbani, gives four reasons: the fee pays for a service it does not regard as legitimate, the trader is learning to carry out impermissible trades, firms train people on instruments that are not Shariah-compliant, and the trader shares in profit from unlawful trading.
It also cites the principle that paying a sum is impermissible when what comes back depends on an uncertain outcome, and points to real spot trading with actual possession instead.
SourcesSeekersGuidance (2026)
In April 2026 Sheikh Ahmad Kutty wrote that many respected scholars consider the prop firm model impermissible: a pass-or-fail structure in which many lose their fees and few succeed, access to speculative instruments such as CFDs and leveraged indices, and simulated trading that trains people for markets built on riba.
Asked in August 2026 about one firm's simulated challenge on its own, he said it "may be permissible" only if the fee pays for a genuine evaluation service, the reward comes from the firm's own funds rather than the forfeited fees of those who fail, the terms are clear, the payout is enforceable once the conditions are met, and any later funded stage is free of riba and leveraged trading.
SourcesSheikh Ahmad Kutty (April 2026)Sheikh Ahmad Kutty (August 2026)
Jordan has not ruled on prop firms by name, but its rulings on leverage reach the funded accounts they offer. In 2023 it was told that leverage is "fake money" the broker provides, so not a loan. It disagreed: the leveraged amount counts toward your losses and the broker profits from every trade made with it, so it is a loan, and every loan that draws a benefit is riba.
Its 2024 fatwa rules out any transaction that uses the leverage system, and a 2024 article from the Department treats margin trading with virtual amounts on price movements as gambling.
SourcesJordan Iftaa' Department, Fatwa 3744Jordan Iftaa' Department, Fatwa 3871Jordan Iftaa' Department (2024)
Foundations and principles
A prop firm has to clear three separate questions. The fee: is it payment for a real evaluation, or a stake in a contest where the many who fail pay for the few who pass? The account: a simulated account involves no real trades, while a real one almost always trades leveraged forex, CFDs or futures. The payout: is it a firm right once you meet the rules, or can the firm change the rules and refuse?
As prop firms are run today, most fail at least two of the three: their funded accounts trade the leveraged products the forex, margin and futures rulings rule out, and their rewards are paid largely out of challenge fees.
What would pass
- Sheikh Kutty's conditions describe a permissible challenge: a fee for a genuine evaluation, rewards paid from the firm's own funds rather than failed participants' fees, clear terms, and a payout the firm cannot refuse.
- A funded account would also need to trade only halal assets that could be owned outright, with no leverage, no CFDs and no futures.
- We have not reviewed any firm against these conditions, and none is named here as passing them.
Further reading
References
- SeekersGuidance (7 June 2026). Is Trading With Prop Firms Halal? Answered by Mawlana Ilyas Patel, checked and approved by Shaykh Faraz Rabbani. Source
- Kutty, Sheikh Ahmad, Islamic Institute of Toronto (28 April 2026). Is Prop Firm Trading Halal? AboutIslam, Ask the Scholar. Source
- Kutty, Sheikh Ahmad, Islamic Institute of Toronto (5 August 2026). Is FundedNext's Simulated Trading Challenge Halal? AboutIslam, Ask the Scholar. Source
- General Iftaa' Department, Jordan (15 February 2023). Fatwa No. 3744: Ruling on Leverage Trading. Source
- General Iftaa' Department, Jordan (5 May 2024). Fatwa No. 3871: It is Prohibited to Trade with the Financial Leverage System. Source
- Mash-Shoqah, Dr. Hamzah (9 December 2024). Common Fiqh Issues in Forex Trading Platforms. General Iftaa' Department, Jordan. Source
ShariaQuant summarises what each body ruled, quotes the wording that matters, and links to every source so you can read the full ruling yourself. This is a record of their rulings, not a fatwa of our own.