A RISK article (subs required) discusses the possibility of local regulators to enforce application of CVA charge on a Pillar II level under Basel III regulation is highlighted – although on an EU level CVA calculation on a Pillar I level has been exempted for corporates, sovereigns and pension funds. BaFin (the German watchdog) as well as the newly formed PRA in the UK are said to be considering following the lead of the likes of Switzerland or Australia to put Pillar II requirements in place for the enforcement of CVA calculation of banks. Constant lobbying work has ensured that carve-outs under EMIR for corporates (who do not need to clear if they use derivatives for hedging purposes only*) also find their way into the European Basel III implementation guidance. Thus, these lobbying groups are not overly happy about the recent development. One consequence of this is that the current pricing for OTC derivatives for corporates will drift further apart as banks can still not be sure how they will need to capitalise such trades under Basel III. As such, the price for the same instrument for a corporate customer can differ substantially between counterparties depending on their view of CVA inclusion. * Under ESMA Regulatory Technical Standards, the EMIR exemption for so-called Non-Financial Counterparties (NFCs) applies as long as the corporate uses derivatives for hedging  purposes or for other purposes up to pre-defined thresholds.