In stock market speak, the term "haircut" refers in general to a discount. In particular cases, this could be, for instance, a percentage discount on the market value of a security that the debtor gives the creditor as collateral. The haircut shows the perceived risk involved in holding the security. In a collateralised transaction – such as a repo – the haircut provides the lender with a guarantee that, if the necessity arises, the proceeds from the sale of the security will be adequate to cover the outstanding debt. The amount of the haircut depends on the extent by which the value of the security is expected to fluctuate. The European Central Bank (ECB) also uses haircuts for its repurchase operations; the amount of the haircut depends on the risk inherent in the security in question. A haircut can also be applied to debt.