- The Basic CVA Framework (BA-CVA) is targeted at banks that are not willing or able to calculate regulatory CVA sensitivities to the satisfaction of their supervisory authorities, or otherwise do not meet the criteria for SA-CVA.
- Even if a bank meets the criteria related to the capability to calculate CVA and CVA sensitivities, it may still be required to use the Basic CVA framework if it does not meet other criteria, for example the requirement that the firm has a CVA desk.
- Within the Basic CVA framework, the eligible hedges are limited to the transactions used for the purpose of mitigating the counterparty credit spread component of CVA risk, and managed as such.
- The permitted trade types are single-name CDS, single-name contingent CDS, and index CDS.
