text: Asymmetry of CSAs Causes FVA Costs | The OTC Space
  For simplicity, we shall assume a portfolio containing a single dealer - client-counterparty trade.
  However, if the dealer - client-counterparty trade is uncollateralised then this impacts the dealer when they are in-the-money with the client-counterparty. This means that they are out-of-the-money with the hedge-counterparty. Since they are not receiving collateral from the client-counterparty, they must borrow the required VM from their internal treasury, for which they will be charged their own cost-of-funds. This is where FVA term known as Funding Cost Adjustment (FCA) arises.
  Now we arrive back at our original problem. This is because the simple diagrams above assume perfect collateral and deal symmetry between dealer - client-counterparty and dealer - hedge-counterparty. In particular, the diagrams assume that:
  The terms of the dealer - client-counterparty trade are identical to those of the dealer - hedge-counterparty trade
  In reality, the asymmetry between CSA agreements can mean that the dealer is willing to accept certain types of collateral (such as corporate bonds) from their client-counterparty, but the hedge-counterparty won't accept this collateral from the dealer! In addition, it may be difficult for the dealer to fund the illiquid collateral (such as corporate bonds) in the repo market to generate the cash needed to post to the hedge-counterparty, and therefore the dealer is forced to borrow from their internal treasury desks - a situation which is similar to that of an uncollateralised swap.