(1) A lender's informal expression for a collateral margin. The amount by which the value of collateral exceeds the loan it secures. Commonly used with repurchase and reverse repurchase agreements informally called repos and reverses.
(2) The dealer's commission for a transaction. American Banker Glossary
The margin or difference between the actual market value of a security and the value assessed by the lending side of a transaction). Bloomberg Financial Dictionary
In determining whether assets meet capital requirements, a percentage reduction in the stated value of assets. In computing the worth of assets deposited as performance bond, a reduction from market value. Chicago Mercantile Exchange Glossary
Another name for the discounting of collateral given to the London Clearing House ( LCH) to cover initial margin payments. This means that the value given to the collateral by LCH will be less than its current market value, the difference between the two sums being the haircut. This protects the clearing house by taking into account the lesser value that it is likely to get in the event of a forced sale of the collateral to meet losses caused by a clearing member default.

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haircut hair‧cut [ˈheəkʌt ǁ ˈher-] noun [countable] FINANCE
1. a small amount off the normal selling price of a bond, share etc:

• Congress forced depositors to take a mandatory 10 to 15% haircut in order to regulate the industry.

2. a reduction in the budget for a plan, investment etc:

• By year end, the project had been given three haircuts, and the managers began to worry about its final outcome.

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   The difference between the actual market value and the value ascribed to the collateral used in a repo transaction.
   ► See also Repurchase Agreement.

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haircut UK US /ˈheəkʌt/ noun [C] US INFORMAL FINANCE
a small reduction in the price of a share, bond, etc.
a reduction in an amount of money: »

The museum director took a haircut of about 8% from his salary.

Financial and business terms. 2012.

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