Taking Interest: Difference between revisions

===Stocks===

# Short selling is a violation of borrowing commodities with interest. This type of transaction between two Jews is forbidden since the  leniencies of borrowing commodities, namely, having a fixed market price that endures for a long time or having a position in that the stock one is short selling, are inapplicable.<ref>[https://traditiononline.org/short-selling-and-jewish-law/ Rav Aharon Levine (Tradition Spring 2010 pp. 67-71)] explains that short selling involves borrowing a commodity which is repaid with that commodity and not merely a cash loan. The commodities in this case are the stocks being sold short. Since the marketplace price is in flux constantly that doesn't permit the seah b'seah transaction. Additionally, the fact that selling outside the box is illegal prevents a person from shorting a position he already owns stock in. Therefore, it isn't possible for someone to have the stocks that he is borrowing while doing a short sell.</ref> For a Jewish marketplace this is a serious issue because either way there is an interest charge for borrowing the stocks for the time. Therefore, these issues need to be solved with a heter iska.<ref> [https://www.toraland.org.il/%D7%A9%D7%90%D7%9C%D7%95%D7%AA-%D7%95%D7%AA%D7%A9%D7%95%D7%91%D7%95%D7%AA/%D7%9B%D7%9C%D7%9B%D7%9C%D7%94-%D7%95%D7%9E%D7%A9%D7%A4%D7%98/%D7%9B%D7%9C%D7%9B%D7%9C%D7%94-%D7%95%D7%94%D7%9C%D7%9B%D7%94/%D7%9E%D7%9B%D7%99%D7%A8%D7%94-%D7%91%D7%97%D7%A1%D7%A8/ toraland.org.il] cites Torat Ribbit 17:33 that since stocks don't represent ownership of the company it isn't considered ribbit or seah bseah. However, since there's a payment of interest for the value of the stocks that is certainly considered interest and requires a heter iska.</ref>

# Buying stocks on margin is forbidden if the brokerage is Jewish since it is lending to the investor money to be able to buy the shares and charging them interest for that loan. This is Biblical interest, but it can be permitted with a heter iska.<ref>Laws of Interest 1:25, Mishnat Ribbit p. 62</ref> A regular heter iska doesn't work for this case.<ref>Mishnat Ribbit p. 62</ref>

# If a person leaves money in a Jewish investment account and it accrues interest leaving money there is forbidden since that would be Biblical interest. However, this transaction can be permitted with a heter iska.<ref>Laws of Interest 1:24, Mishnat Ribbit p. 62</ref> Some poskim would permit collecting interest if the brokerage firm is incorporated.<ref>Laws of Interest 1:24 based on Rav Moshe (Igrot Moshe 2:63)</ref>

===Lending Commodities as Part of a Work Contract===

# If a person hires a worker to plant a field if the employer wants to provide the seeds as a loan and get repaid afterwards he can do so. If it is common for the worker to supply the seeds to plant it the employer can arrange this loan at any time, but if it is common for the employer to supply the seeds to plant it then the employer can only make this arrangement if the worker didn't begin his work.<Ref>Gemara Bava Metsia 74b, Shulchan Aruch Y.D. 162:4. The reason is that before the worker starts his work the employer can build into the contract the arrangement for him to lend the worker his supplies and he'll get repaid. Since it is all part of the original contract it is considered hiring the worker for a lesser wage. However, once the worker starts working the employer can't retract and change the wages. Therefore, if he decides to lend him the commodities for the job it is seah bseah and is problematic. If the worker in that place is supposed to supply the seeds and begins his work it is as though he didn't begin his work since he is unprepared and as such it is still possible to renegotiate his wages.</ref>