Financial Tools and Interest: Difference between revisions
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# Buying and selling options is permitted.<ref>Torat Ribbit 17:36 permits buying and selling options since they can go up or down. If you buy from the open market certainly it is a sale and even if you do it with your broker it is still like a sale and not like an advanced cash payment to get a cheaper deal later. Takanat Haribit p. 47 also permits and thinks it isn't asmachta since it is legally binding. Seder Haribit v. 1 p. 289 writes that buying options is permitted since it is a sale. It isn't like pesika al peirot since you don't necessarily get the fruit you're just buying the right to get them. This is explained by [https://www.yutorah.org/lectures/lecture.cfm/946426/rabbi-ike-sultan/ribbit-investing-in-bonds,-stocks,-short-selling,-naked-shorts,-buying-on-margin,-buying-futures,-options,-money-market-funds-as-they-relate-to-interest/ Rabbi Sultan (Investing in Bonds, Stocks, Short Selling, Buying Futures, Options)]. See Yeshurun v. 33 p. 625-6 who discusses whether options is an issue of ribbit and considers that perhaps it isn't considered a loan at all but a sale. See there at length. | # Buying and selling options is permitted.<ref>Torat Ribbit 17:36 permits buying and selling options since they can go up or down. If you buy from the open market certainly it is a sale and even if you do it with your broker it is still like a sale and not like an advanced cash payment to get a cheaper deal later. Takanat Haribit p. 47 also permits and thinks it isn't asmachta since it is legally binding. Seder Haribit v. 1 p. 289 writes that buying options is permitted since it is a sale. It isn't like pesika al peirot since you don't necessarily get the fruit you're just buying the right to get them. This is explained by [https://www.yutorah.org/lectures/lecture.cfm/946426/rabbi-ike-sultan/ribbit-investing-in-bonds,-stocks,-short-selling,-naked-shorts,-buying-on-margin,-buying-futures,-options,-money-market-funds-as-they-relate-to-interest/ Rabbi Sultan (Investing in Bonds, Stocks, Short Selling, Buying Futures, Options)]. See Yeshurun v. 33 p. 625-6 who discusses whether options is an issue of ribbit and considers that perhaps it isn't considered a loan at all but a sale. See there at length. | ||
* The Shaarei Bracha 166:1 cites the Maharam Chaviv 23 who permits buying from someone the following option: if an investment doubles by a certain date then the provider of this option pays nothing, and if the investment doesn't double then the provider needs to pay the difference between the amount of the investment and double the original investment. In essence this is buying a put option and it is permitted. His proof is Shulchan Aruch Y.D. 173:19 who allows buying insurance.</ref> | * The Shaarei Bracha 166:1 cites the Maharam Chaviv 23 who permits buying from someone the following option: if an investment doubles by a certain date then the provider of this option pays nothing, and if the investment doesn't double then the provider needs to pay the difference between the amount of the investment and double the original investment. In essence this is buying a put option and it is permitted. His proof is Shulchan Aruch Y.D. 173:19 who allows buying insurance.</ref> | ||
# In contrast to an option it is forbidden to say that in a certain eventuality the borrower needs to return the capital with interest and if it doesn't happen he doesn't need to pay at all. This is considered by some to be Biblical interest while others hold it is rabbinic interest.<Ref>Rivash 308 holds it is rabbinic interest, while [https://www.hebrewbooks.org/pdfpager.aspx?req=1952&pgnum=173 Radvaz 1:497] considers it Biblical interest. Shulchan Aruch Y.D. 173:18 quotes the Rivash.</ref> This isn't considered a sale of an insurance policy, for which the payment is made because of risk and not interest, while this is considered a loan.<ref>Chelkat Binyamin 173:201</ref> | |||
==Merchant Cash Advance== | ==Merchant Cash Advance== | ||
#It is forbidden to be a broker for Merchant Cash Advance transactions since halacha deems them as a loan with interest. A heter iska can be used to solve the issue.<ref>[http://dinonline.org/2019/11/27/mca-broker/ dinonline.org] points out that even Rav Moshe’s leniency of corporations wouldn’t apply since there is usually a personal guarantee or COJ attached to the contract. Therefore without a heter iska it is forbidden to be a broker for these transactions.</ref> | #It is forbidden to be a broker for Merchant Cash Advance transactions since halacha deems them as a loan with interest. A heter iska can be used to solve the issue.<ref>[http://dinonline.org/2019/11/27/mca-broker/ dinonline.org] points out that even Rav Moshe’s leniency of corporations wouldn’t apply since there is usually a personal guarantee or COJ attached to the contract. Therefore without a heter iska it is forbidden to be a broker for these transactions.</ref> | ||
