Hello,How do CVA Trading desks exactly work despite the obvious fact that they hedge counterparty risk for all internal desks (through CCDS) and aggregate CVA exposure into a single desk? Do they delta-hedge the CVA on various markets (rates, credit, commodity etc.) in order to crystallize as much as possible their Bank's CVA (make it less volatile)? Or do they monitor closely the jump-to-default risk related to distressed counterparties? Or do they focus on minimizing the CVA so that their P&L would be less hit and at the same equity/capital reserves smaller (VaR CVA impact)?

I think they do a little bit of everything you mentioned. Also, they don't necessarily use CCDSs for hedging, they may be just using CDSs for the purpose of hedging. They also work on mitigating the counterparty risk through collateralization and break clauses. But I guess the main goal is to minimize the overall (bilateral) CVA.

Thanks. I was only referring to CCDS for the purpose of hedging other internal desks. Do they use CDS instead for that purpose?