Michele (Miki) Navazio is a partner in Seward & Kissel’s Corporate Finance group, and chair of Seward’s Derivatives and Trading Practice Group. Miki advises buy-side clients in connection with complex derivatives and structured products, as well as regulatory issues and developments that affect derivatives market participants. His clients include a number of the world’s largest hedge funds and asset managers, as well as private equity firms, mutual funds, institutional investors and corporate end-users.
Miki regularly assists clients in structuring, documenting and negotiating an array of over-the-counter derivative instruments, structured products and repo facilities. These include complex derivatives such as credit default swaps and total return swaps that provide synthetic or leveraged exposure to underlying assets of all types, that provide regulatory capital relief to swap dealers and financial institutions (including VAR or liquidity coverage ratio trades), that serve as credit enhancement or other support for structured finance programs, or that otherwise constitute an alternative to direct investments in the securities, loans, commodities or other assets referenced in such derivatives. His experience in this area encompasses credit and equity derivatives, total return swaps (TRS) and TRS facilities, repurchase agreements (MRA/GMRA) and repo facilities, variance and volatility swaps, exotic OTC options, interest rate swaps, FX and commodity swaps (including those referencing digital currencies). Miki also advises buy-side market participants in negotiating ISDA master agreements and collateral arrangements, tri-party custody arrangements, prime brokerage, futures and swap clearing agreements, derivatives/PB intermediation, margin lock-up agreements, ABS forward transaction agreements (MSFTA) and securities lending agreements (MSLA/GMSLA).
Miki’s derivatives practice encompasses the Dodd-Frank Act and regulations related to both systemic and counterparty risk, swap margin, central clearing and execution of OTC derivatives, collateral segregation, reporting and compliance. He has long advised clients on the implementation of the variation and initial margin rules for uncleared swaps, and is currently assisting those who are preparing for compliance with Phases V and VI of the initial margin rules, addressing issues including documentation and negotiation of the 2018 Credit Support Annex for Initial Margin, SIMM and initial margin determinations, collateral and custodial arrangements. Miki is a frequent speaker on derivatives regulation and documentation, and has recently been a featured panelist for a number of ISDA conferences addressing the implementation of the swap initial margin regime and related documentation and negotiation concerns. He was outside counsel to SIFMA’s Asset Management Group in connection with SIFMA AMG’s discussions with the Federal Reserve and the Bank of England relating to the bank resolution stay regime and its participation in the buy-side working group for the ISDA Resolution Stay Protocol. Miki was also outside counsel to SIFMA AMG and the Managed Funds Association for the ISDA working group that drafted the ISDA 2016 Margin Protocol for Variation Margin and the 2016 CSA for Initial Margin.
Miki’s recent engagements include advising:
- A large US investment manager in structuring and negotiating a repo warehouse financing arrangement for a portfolio of PACE assets
- A major US credit fund in connection with the refinancing of a $750 million loan portfolio TRS using a European style CLO-light warehouse total return swap arrangement.
- One of the world’s largest asset managers in connection with a total return swap referencing a repurchase agreement on LatinAm sovereign debt.
- A major US hedge fund manager in structuring and negotiating a cash-settled total return swap warehouse facility referencing Indian securities.
- A major US investment manager in connection with the structuring, drafting and negotiation of bespoke total return swap contracts providing synthetic exposure to Chinese bank Tier 1 CoCo bonds.
- A large US hedge fund manager in connection with the sale of credit protection on a bond portfolio via a hybrid total return/credit default swap structure.
- A major US hedge fund manager in the negotiation and drafting of a modified pay-as-you-go credit default swap transaction VAR transaction on a portfolio of securitized student loans.
- The UK affiliate of a major US investment manager in connection with a total return swap referencing Indian rupee (INR) denominated and locally-issued infrastructure bonds.
- One of the largest global asset managers in the negotiation of a loan TRS facility for purposes of warehouse financing in connection with CLO launch.
- A major mutual fund complex in the negotiation of Master Securities Forward Transaction Agreements (MSFTA) in connection with new regulatory guidelines.
- Several large US investment managers on compliance with the regulatory initial margin (IM) rules for uncleared swaps that will be effective for certain buy-side clients in September 2020 (Phase 5) and September 2021 (Phase 6).
- The Asset Management Group of the Securities Industry and Financial Markets Association (SIFMA AMG) and the Managed Funds Association (MFA) in connection with their participation in the ISDA working groups drafting the 2016 ISDA Variation Margin Protocol and the ISDA 2016 [Phase One/Phase Two] Credit Support Annex for Initial Margin.
- SIFMA AMG in connection with its participation in ISDA and other industry working groups related to the ISDA Resolution Stay Protocol.
- A top-10 hedge fund manager in the negotiation of a participation via total return swap in certain rate swaps linked to loans issued to a distressed company.
- The MFA on the ISDA Segregated Independent Amount working group.
- Various buy-side clients on the extra-territorial reach of the Dodd-Frank Act and global regulatory reforms of the derivatives markets.
- “Banks, borrowers neglect Libor plans in coronavirus maelstrom,” Reuters (April 15, 2020)
- “Libor Exit Plans Set Up Showdown for Firms Versus Regulators,” Bloomberg (April 14, 2020)
- Author, “Regulatory Initial Margin (IM) Requirements – Time to Get Ready,” Investment Adviser Association, IAA Newsletter (June 2019)
- Author, “ISDA 2018 U.S. Resolution Stay Protocol: Should Fund Managers Adhere or Not?” The Hedge Fund Law Report (November 2018)
- Co-author, “Federal Reserve Adopts Rule Requiring GSIBs to Amend QFC Transactions to Limit Termination Rights of Counterparties,” Futures and Derivatives Law Report (November 2017)
- Co-author, “Master Securities Forward Transaction Agreement: Key Buy-Side Issues,” Futures and Derivatives Law Report (August 2015)
In addition to the above, Miki is often asked to contribute his views on important regulatory developments by prominent market publications. The following are among articles in which he has recently been quoted:
- HFM Compliance, “Industry reacts to derivatives rule pushback” (July 30, 2019)
- Risk.net, “Buy-siders eye ways to get ahead of US resolution stay rules,” Kris Devasabai, February 19, 2019
Miki is a frequent speaker on matters related to derivatives regulation and legal documentation. Recent speaking and conference engagements include:
- Panelist, “Understanding the Next Generation of IM Documentation for Phase 5 Implementation and Beyond,” International Swaps and Derivatives Association (ISDA Virtual Conferences, New York, June 2, 2020)
- Panelist, “Negotiation Strategies: Paragraph 13 of the 2018 Credit Support Annex for Initial Margin (IM),” ISDA Symposium, International Swaps and Derivatives Association (New York, February 27, 2020)
- Panelist, “Understanding the Next Generation of IM Documentation for Phase 5 Implementation and Beyond,” International Swaps and Derivatives Association (New York, September 27, 2019)
- Panelist, “Understanding Variation Margin (VM) Regulations and the 2016 ISDA Credit Support Annex for VM,” International Swaps and Derivatives Association: regular panelist for recurring ISDA conference (New York, most recent conference September 19, 2019)
- Speaker, “The Future of Treasury and Portfolio Finance Management and their Differentiated Benefits – Implications of Initial Margin Regulations,” Hazeltree/Federated Investors, Panel Discussion (New York, June 4, 2019)
- Panelist, “ISDA Master Agreement and Credit Support Annex: Negotiation Strategies,” International Swaps and Derivatives Association (New York, May 22, 2019)
- Speaker, “Non-Cleared Margin Rules,” MFA Chief Financial Officer Forum, Managed Funds Association (New York, November 8, 2018)
- Panelist, “Understanding the Use of Derivatives in Structured Finance Transactions,” Managed Funds Association OTC Derivatives Forum, (New York, February 20, 2018)
- Panelist, “Understanding and Negotiating the ISDA 2016 Credit Support Annex for Variation Margin (VM),” International Swaps and Derivatives Association (New York, May 18, 2017)
- Panelist, “What to Expect for Derivatives Regulation in 2017”, Managed Funds Association OTC Derivatives Forum, (New York, March 30, 2017)
- Panelist, “Making Sense of the EU Bank Recovery and Resolution Directive (BRRD) and Related Protocols for the Buy-Side”, Managed Funds Association OTC Derivatives Forum, (New York, March 30, 2017)
- Panelist, “Roundtable: Uncleared Derivatives,” 2017 SIFMA FIA Asset Management Derivatives Forum (Laguna Beach, CA, February 8, 2017)
- Panelist, “Negotiating the Schedule to the 2002 ISDA Master Agreement,” International Swaps and Derivatives Association (New York, June 8, 2016)
- Panelist and conference creator, “Managing Counterparty Risk in 2016 and the Future: Current Issues for Risk Managers and Legal Practitioners,” International Swaps and Derivatives Association (New York, March 1, 2016)
- Panelist, “Special Resolution Regimes,” 2016 SIFMA FIA Asset Management Derivatives Forum, (Laguna Beach, CA, February 4, 2016)
- Panelist, “Understanding Collateral Arrangements and the ISDA Credit Support Documents,” ISDA: Regular panelist for recurring ISDA conference (New York, most recent conference January 28, 2016)
- Moderator, “Client Segregation & LSOC Panel,” SCI (Structured Credit Investor) 3rd Annual OTC Derivatives Seminar (New York, October 19, 2012)