An institution in the London discount market that purchases promissory notes and resell them or holds them until maturity. The discount houses finance their purchasesof securities mainly by borrowing at short-term from banks and other financial institutions. These borrowings are secured against their holdings of securities.
The London Discount Market Association itself was formed in 1941 with the tacit approval of the Governor of the Bank of England and became an innovative and influential voice in the sterling money markets for many years. However, the London Money Market Association (LMMA) was established in 1997 and has its origins in the London Discount Market Association (LDMA), which was disbanded when the Discount Market was abolished, also in 1997.
Reference: The Penguin Business Dictionary, 3rd edt.