DISCOUNT HOUSES Meaning and
Definition
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Discount houses, also known as discount brokers, refer to financial institutions that primarily deal with the buying and selling of money market instruments and treasury bills. These institutions function as intermediaries between investors, such as commercial banks, and the central bank. The primary purpose of discount houses is to provide liquidity and generate profit from the spread between the buying and selling rates of money market instruments.
Discount houses specialize in buying treasury bills at a discount from the face value and then selling them at a higher price to investors, thus earning a profit. They facilitate the trading of these short-term debt instruments by offering a secondary market where investors can easily buy or sell them. As a result, discount houses play a crucial role in developing short-term money markets and ensuring the efficient allocation of funds.
In addition to treasury bills, discount houses may also engage in the purchase and sale of other money market instruments such as commercial papers, certificates of deposit, and repurchase agreements. They typically have close relationships with commercial banks, which often serve as their main clientele. Discount houses can also provide services like underwriting securities and advising on money market investments.
Overall, discount houses serve as important financial intermediaries that contribute to the functioning and liquidity of money markets by facilitating the trading of short-term debt instruments.
Common Misspellings for DISCOUNT HOUSES
- siscount houses
- xiscount houses
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- fiscount houses
- riscount houses
- eiscount houses
- duscount houses
- djscount houses
- dkscount houses
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- d9scount houses
- d8scount houses
- diacount houses
- dizcount houses
- dixcount houses
- didcount houses
- diecount houses
- diwcount houses
- disxount houses
- disvount houses
Etymology of DISCOUNT HOUSES
The term "discount houses" originated in the financial industry, particularly in the United Kingdom. The etymology of the word can be traced back to the early 19th century when certain financial institutions began to offer discounts on government bills of exchange and other short-term obligations.
The word "discount" originated from the Old French term "descompte", which means "to deduct" or "to take away". It further finds its roots in the Latin word "discomputare", meaning "to deduct" or "to reckon".
The term "house" in the context of financial institutions refers to a specialist company or organization that handles specific types of financial transactions.
Therefore, the term "discount houses" combines "discount", representing the deduction or reduction in price, with "houses", referring to the specialized financial institutions that provide these discounted services.
