Risk glossary

 

Funding valuation adjustment (FVA)

Funding valuation adjustment reflects the funding cost of uncollateralised derivatives above the risk-free rate of return. It represents the costs and benefits of writing a hedge for a client who is not posting collateral, and then hedging that trade with a collateralised one in the interbank market.

See also Valuation adjustments (XVAs).

Click here for articles on funding valuation adjustment.

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