Commission House

DEFINITION of 'Commission House'

A brokerage or merchant firm which buys and sells futures contracts for customer accounts. A commission house generates income by charging a commission on the transactions that are made on behalf of the customers. Also known as a Futures Commission Merchant (FCM).

BREAKING DOWN 'Commission House'

Services might include transactions such as buying and selling bonds, stocks or commodities. More specifically, a commission house gets paid for executing orders, arranging settlement, or servicing margin accounts on behalf of their clients. They typically use omnibus accounts to do this.

RELATED TERMS
  1. Futures Commission Merchant - FCM

    A merchant involved in the solicitation or acceptance of commodity ...
  2. Omnibus Account

    An account between two futures merchants (brokers). It involves ...
  3. Commission Broker

    Someone who gets paid by the brokerage company for which he works ...
  4. Commission

    A service charge assessed by a broker or investment advisor in ...
  5. Merchant Agreement

    A contract between a business and a credit card service provider.
  6. Merchant Account

    A type of business bank account that allows a business to accept ...
Related Articles
  1. Forex Education

    Look For A Reliable Institution

    Here we will cover the preliminary steps you need to take to find your footing in the FX market.
  2. Investing Basics

    How Does Commission Work?

    A commission is the charge that brokers or investment advisors assess in exchange for their services.
  3. Economics

    What Does a Merchant Bank Do?

    A merchant bank is a financial institution that performs underwriting, loan services, financial advising and fund raising services to large corporations.
  4. Professionals

    General Futures Terminology

    General Futures Terminology
  5. Professionals

    Net Capital Requirements

    Net Capital Requirements
  6. Professionals

    Brokers

    Commission House Broker A commission house broker is an employee of a member organization and will execute orders for the member’s customers and for the member’s own account. Two ...
  7. Trading Systems & Software

    Brokerage Reviews: TradeStation Vs. Interactive Brokers

    These are among the most sophisticated brokers in the industry in terms of investment offerings, market access and technology.
  8. Professionals

    FINRA 5% Markup Policy

    FINRA has set a guideline to ensure that the prices investors pay and receive for securities are reasonably related to the market for the securities. As a general rule, FINRA considers a charge ...
  9. Professionals

    Broker Vs. Dealer

    The term broker dealer actually refers to the two capacities in which a firm may act when executing a transaction. When a firm is acting as a broker, it is acting as the customer’s agent ...
  10. Trading Systems & Software

    Top 10 Brokerage Firms For Day Trading

    Day traders have different needs from long-term investors. Investopedia rates the top 10 brokerage firms for day traders.
RELATED FAQS
  1. How can I prevent commissions and fees from eating up my trading profits?

    First off, understand that there is no universal system regarding trading commissions charged by brokerage firms. Some charge ... Read Answer >>
  2. What is the difference between investment banks and merchant banks?

    Merchant banks and investment banks, in their purest forms, are different kinds of financial institutions that perform different ... Read Answer >>
  3. How much money do I need to start trading?

    The step toward becoming an active trader is a big one, because the world of active trading is quite different from that ... Read Answer >>
  4. What does the Daily Average Revenue Trade (DART) tell me about a brokerage?

    A decline in a brokerage firm’s DARTs is not necessarily a cause for alarm, but you need to understand the factors behind ... Read Answer >>
  5. What is the cost of a share purchase?

    Find out how the total price of a share purchase is dictated by the current stock price and the fees the brokerage company ... Read Answer >>
  6. What is financial double-dipping?

    In the financial industry, double-dipping occurs when a financial professional, such as a broker, places commissioned products ... Read Answer >>
Hot Definitions
  1. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  4. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  5. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  6. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
Trading Center