Hedging Counterparty Credit Exposure: The Evolution Of CVA
Posted: 8 September 2011
Nick Newport of InteDelta explains current trends in managing credit valuation adjustments and the potential use of CVA beyond its traditional risk mitigation purposes.
How developed and embedded has the concept of credit valuation adjustment (CVA) become within financial institutions?
Most major financial institutions feel that they need to be doing something in the area of credit valuation adjustment (CVA) as it is seen as integral to providing for active management of risk, greater control over counterparty risk reserve costs and alignment with the evolving trends in the management of economic and regulatory capital. However the current use of CVA differs greatly across the different types of financial institution within the market.