 |
Definition of 'Haircut'
1. The difference between prices at which a market maker can buy and sell a security.
2. The percentage by which an asset's market value is reduced for the purpose of calculating capital requirement, margin and collateral levels.
|
 |
Investopedia explains 'Haircut'
1. The term haircut comes from the fact that market makers can trade at such a thin spread.
2. When they are used as collateral, securities will generally be devalued since a cushion is required by the lending parties in case the market value falls.
|
-
Learn about the systems that run the market. Topics include market makers, specialists, SuperDOT, ECNs, SOES, Level I, II, and III Access, and more.
Read More »
-
Huge companies may not be as infallible as previously assumed. Find out why bigger isn't always better.
Read More »
-
Read More »
|
|