The FVA debate continues: Hull and White respond to their critics

The FVA debate continues

When we wrote our article arguing that, contrary to industry practice, derivatives prices should not include a so-called funding valuation adjustment (FVA) to reflect the cost to dealers of funding their hedging portfolios, the interest it would generate never occurred to us (Risk25 July 2012, pages 83–85, Risk September 2012, pages 18–22, and pages 23–24). Much to our surprise, we have been inundated with responses from practitioners all over the world, on both sides of the argument. It seems