Basel III rules include a charge for credit-valuation adjustment, which market participants said could stimulate liquidity and the development of the contingent credit default swaps market. "A CCDS offers a market hedge and a credit hedge, as well as a cross-gamma hedge," said Bill Mertens, former head of credit hybrids at ICAP. "It's a complete hedge for a counterparty-risk position, whereas a CDS is not."

Related Summaries