Japan CVA shift may break local banks’ swaps stranglehold

Introduction of pricing adjustment could see foreign banks compete for corporate business

For years, Japanese banks’ practice of not charging derivatives clients for counterparty risk has made them an outlier compared to their peers in other developed nations, and has locked international banks out of the domestic corporate swaps business in the process.

But the country’s banks are now on the path toward pricing a so-called credit valuation adjustment (CVA) into the cost of new derivatives trades – a move some believe is motivated by a combination of new regulations and financial

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