The purpose of this paper is to analyze the structure and the operation of both the primary and the secondary markets for stocks and bonds, including the use of options, warrants, and rights in the securities market of a modem economy, such as the United States, with a view to ascertain which of these securities might be permissible to invest in under an IsIamic economic system. Section I starts with a brief description of the nature and operation of the primary and the secondary markets for securities. It then describes the nature and scope of each type of security in terms of risks and returns to the issuer and the investor. Section 11 starts with an interpretation of the Islamic injunctions with respect to trade and investment. It then proceeds to examine the extent and conditions under which investment in particular securities may be permissible under an Islamic Economic System. Section 111 summarizes the results of the study and concludes with some tentative suggestions.