Discount House

A discount house is a financial institution that specializes in buying, selling, and rediscounting short-term money market instruments such as Treasury bills and commercial paper. These institutions play a key role in providing liquidity to the money markets by purchasing securities at a discount and then reselling them to other investors or rediscounting them with central banks. Discount houses are essential for ensuring smooth functioning in the money markets, helping to regulate the supply of short-term credit and acting as intermediaries between lenders and borrowers.

Example

A discount house buys Treasury bills from a corporation and sells them to another investor at a slight markup, making a profit from the difference.