Warning

Info

Warning

Info

Warning

Info

LSDefine

Simple English definitions for legal terms

haircut

Read a random definition: right of visit and search

A quick definition of haircut:

A haircut is a term used in finance that refers to the discount or reduction in the value of an asset. For example, if a brokerage firm holds stock in its own account, it may be required to take a haircut on the value of that stock when reporting its net capital condition. Similarly, when someone takes out a loan and uses an asset as collateral, the difference between the loan amount and the market value of the collateral is known as a haircut.

A more thorough explanation:

Definition: A haircut is a term used in finance and securities regulation to refer to the discount or reduction in value applied to an asset or security when it is used as collateral for a loan or held by a brokerage firm.

Example 1: In securities regulation, a brokerage firm is required to report its net capital condition on a monthly basis. As part of this report, the firm must apply a haircut to the value of any stock it holds in its own account. This means that the reported value of the stock will be lower than its actual market value, reflecting the risk associated with holding the stock as collateral.

Example 2: A borrower may offer a piece of property as collateral for a loan. The lender will typically apply a haircut to the value of the property, meaning that the loan amount will be less than the market value of the property. This is done to protect the lender in case the borrower defaults on the loan and the property needs to be sold to recover the debt.

These examples illustrate how a haircut is used to reduce the value of an asset or security in order to account for the risk associated with holding it as collateral or as part of a brokerage firm's own account. By applying a haircut, lenders and brokerage firms can protect themselves from potential losses and ensure that they have sufficient capital to meet their obligations.

Hague Tribunal | haircut reorganization

Warning

Info

General

General chat about the legal profession.
main_chatroom
👍 Chat vibe: 0 👎
Help us make LSD better!
Tell us what's important to you
18:49
thank you my little crow friend
Dkk
18:50
Med law easy done
medicine is a scam
join the ethically ambiguous legal field instead
Dkk
18:57
I want to meet an attorney that defends clients who run into flat earth problems. I want an attorney that knows and believes in flat earth theory.
19:05
i want a flat earther for president. i want a guy who posts on 4chan for president. i want someone who mogs for president.
Dkk
19:18
Exactly. My version of that awful poem.
Dkk
19:19
I can accept a president with maybe one or two of the poems traits hut good God, all of them??? No ty.
windyMagician
19:20
president who respects sex is crazy
windyMagician
19:20
we had bill clinton already
Dkk
19:21
Bill Clinton, first and last black president
windyMagician
19:23
I want to go running but my leg feels weird
windyMagician
19:23
it doesn't hurt its just tingly
Dkk
19:26
It needs more alcohol. You tingle when your nerves need watering.
19:27
try stretching it maybe to see what's up
windyMagician
19:27
stretches make me think it's just soreness
windyMagician
19:27
I'm sober lol
Dkk
19:38
Anyone else get the google notification that your LSD password has been compromised lol. LSD got hacked.
20:48
what.jpg @Dkk
CynicalOops
21:03
You think you just fell out of a coconut tree?
jackfrost11770
21:10
nope dk
CynicalOops
22:37
Calvinamala Harris
jackfrost11770
23:16
should i start using letterboxed again
Dkk
23:25
@jackfrost11770: if you want but like it aint for me
dk do u ever eat at bk
Dkk
23:48
@chickenburgahfart: I would do that in the Army if really desperate for food or if I had to work through lunch. One of the few fast food places I go to.
bk so slept on
Dkk
0:23
I will take In N Out everyday over it when I can though.
LSD+ is ad-free, with DMs, discounts, case briefs & more.