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LSDefine

Simple English definitions for legal terms

haircut

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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

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HopefullyInLawSchool
13:34
they emailed you/
HopefullyInLawSchool
13:34
?
13:35
@HopefullyInLawSchool: Yea, I just got it
i just want a cornell ii :(
13:37
yak you will be fucking shit up at cornell this time next year dw
i love u
13:38
love you too bby
glovediedthisishismom
13:42
what if desantis appoints lara trump and matt gaetz to be floridas senators
Dkk
13:42
Sounds good to me
HopefullyInLawSchool
13:43
@glovediedthisishismom: What if he appoint Ym instead?
HELP
every damn opportunity
13:47
do schools straight reject people from ed or to they always ed-rd if its a no for ED?
HopefullyInLawSchool
13:48
Some schools rject
13:49
Thanks! I couldn't find any reddit thread about it lol
13:49
but just means now I have to wait for the rejection from Davis
glovediedthisishismom
13:53
i just wanna rock
glovediedthisishismom
13:53
bodyadaya
13:53
let it rock
14:17
How are the vibes heading into thanksgiving yall?
HopefullyInLawSchool
14:17
@Law-Guy Im feeling kinda happy I applied YM to UCI hoping it helps (:
Wanna give some head
soap
14:18
Cornell
14:19
@HopefullyinLawSchool What's YM?
14:19
oh no
HopefullyInLawSchool
14:19
you mom
WorthlessAttractiveZombie
14:19
Ouch
HopefullyInLawSchool
14:19
your*
14:19
I fear I realized too late
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