Clients should prepare to pay MVA costs, say dealers

Risk USA: Banks say new trades and novations create real funding costs

image of coins being weighed
Dealers looking to pass on margin valuation adjustment costs

The buy side should prepare to shoulder the cost to banks of funding initial margin on non-cleared derivatives, say market participants.

Since September 1, more than 20 of the world's largest banks have been required by US regulators to post initial margin for trades conducted between them under non-cleared swaps rules. The cost of funding this new collateral requirement is called margin valuation adjustment (MVA), and is a change to the price of a trade.

MVA pricing is still new and approaches

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: