A finance term for a discount or loss. An investor is said to take a haircut on a poor investment that has been sold at a loss. The term is also used when discussing the percentage at which eligible collateral pledged under a trading relationship, is valued by the parties for purposes of calculating whether or not sufficient margin collateral has been posted or whether collateral must be returned or a collateral call made. The haircut corresponding to a particular type of collateral is typically a function of the riskiness of the asset being posted as collateral and the creditworthiness of the counterparty posting the collateral. The haircut on US treasury bills, for example, is typically about 0-2%. This means that they are valued at 98-100% of face value for purposes of determining aggregate collateral movement between the parties to a collateralized transaction. For sample haircuts on a variety of collateral types, see Standard Clause, Sample Collateral Eligibility Table for Bilateral Transactions.