## What is XVA (X-Value Adjustment)?

Valuation adjustment is the umbrella name for adjustments made to the fair value of a derivatives contract to take into account funding, credit risk and regulatory capital costs. Dealers typically incorporate the costs associated with XVAs into the price of a new trade.

## What is XVA calculation?

X-Valuation Adjustment is **a catch-all term for various adjustments made to derivative instruments**. These kinds of calculations are computationally intensive: they require a modeller to calculate a larger number of default scenarios and the potential loss (Potential Future Exposure, or PFE) in each case.

## What does XVA stand for in finance?

XVA, or **X-Value Adjustment**, is a collective term that covers the different types of valuation adjustments relating to derivative contracts.

## What is XVA in risk?

WHAT IS THIS? The XVAs are **a family of adjustments that can be made to the price of a derivatives trade**, reflecting counterparty risk (CVA), own-default risk (DVA), funding (FVA), capital (KVA) and margin (MVA).

## What does an XVA trader do?

XVA traders are engaged in a broad range of functions including **pricing, hedging, risk analysis and optimization across various derivative products including rates, FX, commodities, credit and equities**.

## What does XVA trading desk do?

The XVA desk **centralises the various valuation adjustments and receives all data inputs for measuring XVAs**. XVA centralisation offers significant benefits in terms of best practice, one of which is the aggregation of trades from across different trading desks and asset classes.

## What is Basel III credit value adjustment?

CVA is **an adjustment to the fair value (or price) of derivative instruments to account for counterparty credit risk (CCR)**. Thus, CVA is commonly viewed as the price of CCR. … The purpose of the Basel III CVA capital charge is to capitalise the risk of future changes in CVA.

## What is FVA derivative?

An FVA is **an adjustment to the value of a derivative or a derivatives portfolio that is designed to ensure that a dealer recovers its average funding costs when it trades and hedges derivatives**. Theoretical arguments indicate that the dealer’s valuation should not recover the whole of its funding costs.

## What is debt valuation adjustment?

Debt Value Adjustment (DVA) is basically CVA from the counterparty’s perspective. If one party incurs a CVA loss, the other party records a corresponding DVA gain. DVA is **the amount added back to the MTM value to account for the expected gain from an institution’s own default**.

## How much do XVA traders make?

**$64k-$175k** XVA Trading Jobs (NOW HIRING) | ZipRecruiter.

## What is liquidity valuation adjustment?

Definition: The Liquidity Value Adjustment (LVA) is **the discounted value of the difference between the collateral rate and the risk free rate on the collateral**, and it represents the profit or loss produced by the liquidation of the Net Present Value of the derivative contract due to the collateralization agreement.

## What is BA CVA and SA CVA?

The BA-CVA only encompasses the recognition of hedges pertaining to the counterparty credit risk component. It does not recognise exposure associated hedges. In the SA-CVA, calculation of the CVA risk capital requirements must be on all eligible transactions and their eligible CVA hedges.

## What is the difference between CVA and DVA?

The same parameters are used to estimate DVA as CVA. In principle, CVA = DVA for a derivative that has unilateral credit risk such as an option contract. The difference is only in perspective**CVA is the credit risk facing the option holder whereas DVA reflects the credit risk of the entity that writes the contract**.

## What is an uncollateralized derivative?

Uncollateralized derivatives are **limited to trades between financial counterparties and**. **non-financial counterparties**, and therefore represent a very small fraction of the market.

## What is DVA debit valuation adjustment?

Debit Valuation Adjustment (DVA) The debit valuation adjustment is **the impact of your credit risk on the value of a derivative** (which would be the CVA from the perspective of your counterparty looking at you).