Haircut is the discount applied to the collateral posted. Say you need to post a margin of 100 crs for entering an OTC derivative position, and 3% is the haircut applicable. So, 100/0.97 = 103.1 crs will need to be posted as collateral. (You'll post 103.1 crs, which will be considered as 103.1*(1-0.Read more
Haircut is the discount applied to the collateral posted.
Say you need to post a margin of 100 crs for entering an OTC derivative position, and 3% is the haircut applicable. So, 100/0.97 = 103.1 crs will need to be posted as collateral. (You’ll post 103.1 crs, which will be considered as 103.1*(1-0.030) = 100 crs)
Concept of Hair Cutting
Haircut is the discount applied to the collateral posted. Say you need to post a margin of 100 crs for entering an OTC derivative position, and 3% is the haircut applicable. So, 100/0.97 = 103.1 crs will need to be posted as collateral. (You'll post 103.1 crs, which will be considered as 103.1*(1-0.Read more
Haircut is the discount applied to the collateral posted.
Say you need to post a margin of 100 crs for entering an OTC derivative position, and 3% is the haircut applicable. So, 100/0.97 = 103.1 crs will need to be posted as collateral. (You’ll post 103.1 crs, which will be considered as 103.1*(1-0.030) = 100 crs)
See less