What is haircut? How to deal with haircut in negative asset? Newbie needs help.

Discussion in 'Trading' started by fedfeng, Mar 2, 2018.

  1. fedfeng


    I have no experience in trading but I need to figure out this basic trading problem regarding haircut. I really need help.
    Say a company owes 500 USD market value of BRL, but also possess 1000 USD worth of GBP. The haircut for GBP is 6%, while the haircut for BRL is 20%.

    What is the USD worth of haircut for BRL and GBP? What is the total haircut?
    When calculating net capital for the firm,
    Should it be the absolute value or negative value for BRL? -500*20% ?
    The totals should be 500*20% + 1000*6%