Goals of CVA Desk

Discussion in 'P2.T6. Credit Risk (25%)' started by Ankur S, Apr 22, 2012.

  1. Ankur S

    Ankur S Member

    Hi David,

    My understanding tells me the CVA desks helps in pricing c/p risks into the trades and help evaluate whether a new trade is adding risk to a particular counterparty portfolio exposure or risk reducing...which i get it... but why will CVA desk pay to derivatives desk if reducing unless banks dont want trading desks to take a mtm hit because of c/p risks?

    Unless CVA desk have CDS portfolios for hedging c/p risks...where (in very broad idea) their premiums get reduced with risk reducing trades and they pass that gain to trading desks...Is this the case?

    How does it work? Could you pls advise.


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