CVA desks could struggle with Volcker correlation tests

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The Volcker rule's treatment of hedging will increase the workload for credit valuation adjustment (CVA) desks and, in a worst-case scenario, could prevent them from putting in place capital-mitigating trades, dealers fear.

Some banks are now consulting in-house lawyers on what the long-awaited rule, published on December 10, means for the desks. The head of CVA trading at one large European bank with operations in the US says the regime looks like trouble, but adds: "The lawyers need to dig int

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