What is the catch with XM's Islamic account?

[kingneil]

I want to ask about the XM.com Islamic account.

https://www.xm.co.uk/islamic

What is the catch?

The Islamic account allows you to trade without overnight interest, or any interest.

You only pay the spread, and all other trading conditions are the same.

Same leverage, same prices, same everything. No time limits on how long you can hold open a position.

How can they possibly lend you money, which they themselves have borrowed, and not charge you interest?

Surely they would lose loads of money borrowing money and then lending it to you literally for free, and for unlimited periods of time.

I just don't get it.

 

[mpups]

I want to ask about the XM.com Islamic account.

https://www.xm.co.uk/islamic

What is the catch?

The Islamic account allows you to trade without overnight interest, or any interest.

You only pay the spread, and all other trading conditions are the same.

Same leverage, same prices, same everything. No time limits on how long you can hold open a position.

How can they possibly lend you money, which they themselves have borrowed, and not charge you interest?

Surely they would lose loads of money borrowing money and then lending it to you literally for free, and for unlimited periods of time.

I just don't get it.

You're right it doesnt make sense, i would also be interested to know how they can offer the swap-free account without any additional fee. Give them a call on Monday .

btw i believe in fairies.. i wonder if i can get smaller spreads?

 

[Pat494]

I doubt that they are borrowing any money. They take customers' money and earn interest on it. Probably make on most ( 95% ) of the accounts too.
They charge overnight interest usually.

 

[kingneil]

I doubt that they are borrowing any money. They take customers' money and earn interest on it. Probably make on most ( 95% ) of the accounts too.
They charge overnight interest usually.

How is it Mathematically possible that they're not borrowing any money?

If I were to go their site and take out a £50,000 position with 1:2 leverage, then they would have to open a £100,000 position...

How are they going to do that without borrowing money?

Especially if I were to win the trade, and the price were to double, then I would make £50,000 profit.

How could they just hand me £50,000 in profits without having borrowed the money?

Where are they going to get all this money?

Not to mention if I were to do the same with literally £1 million or some ridiculously large bet.