XVAs: a gap between theory and practice

Hull and White see splits on FVA, MVA, KVA as irreconcilable

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No common ground: economists and practitioners look at XVA through different lenses

John Hull and Alan White are professors of finance at the Joseph L. Rotman School of Management, University of Toronto

In 2012, we wrote an article on funding valuation adjustment (FVA) for the 25th anniversary issue of Risk magazine. The FVA Debate argued dealers should not make FVAs – which are supposed to reflect the funding effects associated with derivatives collateral posting – and generated a huge amount of interest, much of it from people who disagreed with us.1

The debate continues to

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