Warning

Info

Warning

Info

Warning

Info

LSDefine

Simple English definitions for legal terms

haircut

Read a random definition: placitum nominatum

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
MIAMI A
[] AromaticTroubledDormouse
20:55
How does one know if they are UR1 or UR2?
[] AromaticTroubledDormouse
20:56
CONGRATS MACAQUE!
TY
got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
LSD+ is ad-free, with DMs, discounts, case briefs & more.