HALAL TRADING ROOM

Equities are the one asset class where the mainstream contemporary answer is yes, with conditions rather than a disagreement about whether the contract is valid at all. The reason is structural: a share is a proportionate ownership stake in a real, operating business — you own a slice of its assets, you carry a slice of its risk, and you receive a slice of its profits. That is the shape of a musharakah, a partnership, which Islamic commercial law has always permitted. It is not a wager on a number, and nothing about it is deferred on both sides. So the question never really lands on "is trading shares permissible" — it lands on which company, and how you hold it.

Owning a slice of a business means owning a slice of what that business does. If the underlying activity is impermissible, no ratio can rescue it — this screen is a gate, not a score. The activities excluded by essentially every published standard are conventional banking and lending, conventional insurance, alcohol, pork, gambling and casinos, adult entertainment, and tobacco. Weapons, defence contracting and conventional-hotel operations are treated differently by different standards, which is itself worth knowing rather than glossing over.

The hard cases are not the obvious ones. They are the diversified conglomerate whose main business is fine and whose subsidiary is not, the airline earning real revenue from in-flight alcohol, and the supermarket chain selling pork alongside everything else. Standards handle these with a revenue tolerance — typically 5% of total revenue from non-permissible sources — on the reasoning that an unavoidable, minor and incidental element does not contaminate an otherwise permissible enterprise. That tolerance is a judgement, and it is where the first real disagreement begins.

A company whose business is entirely permissible can still fail, because almost every listed company touches interest somewhere — a revolving credit facility, a bond issue, interest earned on idle cash. The ratio screens exist to bound that exposure rather than pretend it is absent. Three limits do most of the work, in the form used by the major standards:

— Interest-bearing debt under roughly 30–33% of market capitalisation (some standards use total assets as the denominator instead, which produces genuinely different answers for the same company).
— Interest and other non-compliant income under 5% of total revenue.
— Cash and interest-bearing securities, and in some standards receivables, under a stated fraction of market capitalisation or assets.

The standards agree on the shape and disagree on the numbers and the denominators, which is why this site applies seven of them side by side — AAOIFI, Usmani, Dow Jones Islamic, S&P Shariah, MSCI Islamic, MSCI Islamic M-Series, FTSE Shariah — and shows each one's verdict separately on the symbol page rather than collapsing them into a single confident answer. When they disagree about a company, that disagreement is the honest result.

Every threshold above is contemporary ijtihad, not a transmitted text — a reasoned attempt to apply the principle that a minor unavoidable element does not spoil the whole to companies that did not exist when the principle was formulated. A real minority of scholars does not accept it. Their position is that riba admits no tolerance band: a company that borrows on interest is participating in riba, your ownership share makes you a participant in it, and 29% is not meaningfully different from 34%. It is a coherent position, held by qualified people, and anyone relying on a screen should know that the screen encodes one side of a live argument rather than a settled fact. The practical consequence is a much narrower investable universe, weighted toward debt-free companies.

The tolerance thresholds permit a holding; they do not make the non-compliant portion of its income yours. The standard remedy is purification — calculate the share of the company's income that came from impermissible sources, apply that percentage to the dividends you received, and give that amount away to charity without expecting reward for it. It is a small number in practice and it is the step most often skipped. Capital gains are treated differently by different scholars: some require purifying them on the same basis, others hold that the screen already did that work at the point of purchase.

A passing verdict is about the company, and it does not travel to every possible transaction in that company's shares. Margin means borrowing at interest, which is riba on your side of the trade regardless of how clean the issuer is. Short-selling means selling something you do not own and have not taken possession of, which fails a separate and much older condition. Preferred shares are widely treated as impermissible even in a compliant company, because a fixed, prior claim on profit ahead of the ordinary shareholders is closer to a debt instrument earning a guaranteed return than to a partnership sharing real risk. And options and futures on a compliant stock are still options and futures — see Is Options Trading Halal? and Is Futures Trading Halal?. Holding period, by itself, is not on this list; that question is Is Day Trading Halal?.

Every stock here is put through both gates before it is eligible to appear anywhere — a business-activity classifier and the seven ratio methodologies above, computed from figures read out of the company's own SEC filings rather than copied from a provider's summary. The verdict, the ratios it was computed from, and each standard's individual answer are published on the symbol page, so you can check the reasoning instead of accepting the label: see the full stock compliance list or the methodology behind it. The auto-trading side is long-only, cash-sized and margin-free by construction, for the reasons in section 5. None of this is a fatwa — it is a published methodology applied consistently, and your own account structure and circumstances still matter. When in doubt, consult a qualified scholar.