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| WHAT IS A DISCOUNT HOUSE? A financial organization that purchases BANKERS' ACCEPTANCES and TRADE ACCEPTANCES, BILLS OF EXCHANGE, and COMMERCIAL PAPER (short-term IOU, or unsecured money market obligation). Acceptances, negotiable bills of exchange, and commercial paper are money market instruments (market where short-term debt securities are issued and traded). The purpose of the discount house is to purchase the above items, clearing the debt off the books of the institution holding them. It is a way for a lending institution to increase its cash flow, albeit for a smaller return than if the instruments were held until maturity. There are currently two discount houses in Malawi. CDH & First Discount House.
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