What is a Commission House?
A commission house is a type of brokerage and much like any other brokerage, it is a firm that buys and sells futures on the stock market on behalf of its clients. However, unlike most brokerages which also buy and sell futures to enrich their own portfolios, as well as for their customer’s accounts, the commission house only engages in transactions on behalf of their customers. For this reason, a commission house is called a commission house because it depends exclusively upon the income from transaction commissions in order to sustain its business. The range of securities and commodities bought and sold by a commission house are comparable to any other brokerage. Commission houses deal in futures contracts, which is a contract to buy or sell a standardized quantity of a commodity on the futures exchange. A futures contract implies an obligation to the holder to meet the terms of the contract on the settlement date, as opposed to a stock option, which grants the buyer the right, but n
Commission houses are firms that focus on the purchase and sale of investment contracts for the individual accounts of their customers. In exchange for this service, the commission house charges a fee on each transaction that is known as a commission. This is slightly different from a general brokerage, in that the commission house engages in transactions related only to customer accounts. Many brokerages also buy and sell contracts for their own account as well as for the accounts of their clients. Because a commission house usually does not engage in building an in house portfolio for the business, the firm depends on commission income to maintain and grow the business. The most common approach is to debit a customer account each time that the commission house makes a purchase or sale that is relevant to that account. This method allows the investor to be able to assess the amount of expense in each transaction and plan investment strategies accordingly. The exact process for determi
