Dodgy discounts: DVA claims fly in cross-currency market
Derided pricing adjustment is being used to undercut competition, traders claim
A surge in euro borrowing by corporates over the past year has been supported by a dramatic narrowing of dealer charges for cross-currency swaps – a result of fierce competition among dealers, as well as the industry's increasing confidence in recognising the funding benefits these trades can generate. In some cases, though, pricing has become so cheap banks claim it can only be explained by the use of a widely derided adjustment for a dealer's own risk of default.
Critics say the debit
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