Basel III charge could spur interest in CCDS

CCDS: a better hedge?

The development of a more liquid market in contingent credit default swaps (CCDSs) is likely to be stimulated by an explicit charge for credit valuation adjustment (CVA) contained in Basel III, say market participants.

CCDSs linked to single names and bespoke baskets of stocks have traditionally been used to hedge CVA books. An explicit charge for CVA has been one of the most controversial parts of the new Basel III capital framework, which was finalised in December.

"A CCDS offers a market

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