How To Fix FTBCVA070 - Sold option &1: DVA is restricted to risk-free NPV

SAP Error Message - Details

• Message type: E = Error

• Message class: FTBCVA - Credit Value Adjustment

• Message number: 070

• Message text: Sold option &1: DVA is restricted to risk-free NPV

Self-Explanatory Message

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Smart SAP Assistant

• What is the cause and solution for SAP error message FTBCVA070 - Sold option &1: DVA is restricted to risk-free NPV ?

  The SAP error message FTBCVA070 indicates that there is an issue with the valuation of a sold option in the context of a derivative or financial instrument. Specifically, the message states that the "DVA (Debit Valuation Adjustment) is restricted to risk-free NPV (Net Present Value)." This typically arises in the context of financial instruments where the valuation adjustments are being calculated, and the system is enforcing certain constraints on how these adjustments can be applied.
  Cause:
  
  Risk-Free Valuation: The error suggests that the valuation of the sold option is being calculated under the assumption of a risk-free environment. This means that the system is not allowing for any credit risk adjustments (like DVA) to be applied to the valuation of the option.
  Configuration Issues: There may be configuration settings in the SAP system that restrict the application of DVA for certain types of financial instruments or transactions.
  Data Issues: There could be missing or incorrect data related to the financial instrument, such as incorrect parameters for the valuation model or missing market data.
  
  Solution:
  
  Review Configuration: Check the configuration settings related to the valuation of financial instruments in your SAP system. Ensure that the settings allow for the application of DVA where appropriate.
  Check Valuation Parameters: Review the parameters used for the valuation of the sold option. Ensure that all necessary data is present and correctly configured.
  Consult Documentation: Refer to SAP documentation or notes related to the FTBCVA070 error message for specific guidance on how to resolve the issue.
  Adjust Valuation Method: If the business context allows, consider adjusting the valuation method to one that permits the application of DVA, if applicable.
  Contact SAP Support: If the issue persists, consider reaching out to SAP support for assistance. They may provide insights specific to your system configuration or any known issues.
  
  Related Information:
  
  DVA (Debit Valuation Adjustment): This is an adjustment made to the valuation of a financial instrument to account for the credit risk of the counterparty. It reflects the potential loss in value due to the counterparty's credit risk.
  NPV (Net Present Value): This is a financial metric used to assess the profitability of an investment or project, taking into account the time value of money.
  SAP Financial Services: If you are using SAP for financial services, ensure that you are familiar with the relevant modules and their configurations, such as SAP Treasury and Risk Management.
  
  By addressing the underlying causes and following the suggested solutions, you should be able to resolve the FTBCVA070 error message in your SAP system.