Corporates use XVA caps to limit unwind charges
Veolia caps CVA and FVA unwind costs in trades with 10 banks
Big corporates have found a new way to reduce the cost of trading derivatives on an uncollateralised basis: pay dealers upfront for a cap on the charges that can accompany an unwind. For the buyer, the cap replaces an unknown cost with a known one, but it further increases the complexity of the business for dealers, which claim the option is impossible to hedge.
Paris-based water, energy and waste
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