In the credit purchase of stocks, a broker buys stocks for the customer and pays the price of them using the bank's credit line, then after the deadline, the broker receive the amount from the buyer of the stocks. In this case, the broker usually receives profit from the buyers in proportion to the amount and duration of credit used.

The Relationship Between the Broker and the Bank

• The Juala contract, which is used by some banks for this purpose today, is not shariah compliant, because the bank cannot receive profit based on the amount and duration of the credit against the resources used based on the Juala contract. Apart from the fact, the broker cannot take profit from the customer for the amount and duration of credit used.
• It shall be defined between the bank opening the credit line and the broker and also between the broker and the credit buyer of stocks, otherwise it is not permissible to buy stocks for the customer with the bank's resources.
• Based on the civil partnership agreement, the bank can provide a credit line to the broker and authorize him to use both the bank and broker’s resources to purchase in cash in a partnership form and sell stocks in a Murabaha form.

Credit Granting Models to brokerage Clients

Based on Murabahah
• In this method, the broker buys the stocks for the customer in cash and sells them to him as a term loan while the Murabaha profit is considered.
• In the credit purchase Murabaha contract, the amount of the discount shall be included in case of early settlement and the amount of fine in case of delay.
• The profit rate shall be determined in a way that it covers the expected profit of the bank from the partnership, the broker may give the total profit of Murahaba to the customer due to mutual benefits, but customer must pay the bank's profit share.
• The broker can take a part of the resulting profit as an attorney's fee to perform Murabaha.
• The brokerage can pay for the necessary resources to perform Murabahah from its own resources.

Based on Participation
In this method, the bank provides fund to the broker to allocate to the customers. No matter how much the customer uses the bank's resources, he participates in the purchased stock with the bank. This participation is limited to a certain time. The customer can sell the stocks until the maturity date and settle with the bank according to the "settlement formula".
"Settlement formula" means the principal of the bank facility used in the credit purchase plus the expected benefit of the facility, which is the expected benefit of the facility from the product. The principal of the facility is obtained by multiplying the expected profit rate and the period used, divided by the participation period (for example, 30 days). In this case, the customer first buys stocks of Al-Sherkeh Bank according to the "settlement formula" and then sells them. If the customer does not sell the shares of the company until the due date, he must either buy the share of the bank or renew the partnership agreement.