Credit Rating

Credit rating is the evaluation of
the credit worthiness of an individual or of a business concern or of an
instrument of a business based son relevant factors indicating ability and
willingness to pay obligations as well as net worth.

The main purpose of the credit
rating is to communicate to the investors the relative ranking of the default
loss probability for a given fixed income investment in comparison with of the
rated instruments.

Credit rating will be given by a
credit rating agency which is a body corporate engaged in or proposes to be
engaged in the business of rating of securities offered by way of public or
rights issue

Some of Credit Rating agencies are
below

1.      CRISIL (Credit rating and
information services (India) Limited)

2.      ICRA (Investment  (information) Credit Rating Agency)

3.      CARE (Credit analysis and research
limited)

4.      India ratings and research Pvt LTD

5.      Brickwork ratings pvt ltd

6.      SMERA (SME Rating Agency of India
limited)

These Rating Agencies are regulated
by SEBI (Credit Rating Agencies Regulations) 1999

The Credit Rating Process will be

·        
The
issuer of securities will request the rating agency for credit rating

·        
The
rating agency will assign a rating team

·        
The
Rating team will collect the required information about the security and issuer

·        
The
Rating team will meet the key officials and the 
management team

·        
Rating
committee will conduct a meeting for Rating

·        
Rating
agency will communicate the Rating to the issuer

·        
Publication
of the rating

·        
Surveillance
and annual review of the performance of the issuer operations

Factors to be considered for Rating

·        
Industry
Risk

·        
Companies
Market position

·        
Operating
Efficiencies

·        
Accounting
Quality

·        
Financial
Flexibility

·        
Earning
Protection

·        
Finacial
Leverage

·        
Cash
flow Adequecy

·        
Management
Evaluation

·        
Asset
Quality

Scheme of revival and rehabilitation

Sec 261 of the Companies Act 2013

 

(1) The company administrator shall prepare or cause to be
prepared a scheme of

revival and rehabilitation of the sick company after considering
the draft scheme filed along with the application under section 254.

 

(2) A scheme prepared in relation to any sick company under
sub-section (1) may

provide for any one or more of the following measures, namely:—

(a) the financial reconstruction of the sick company;

(b) the proper management of the sick company by any change
in, or by taking over, the management of such company;

(c) the amalgamation of—

(i) the sick company with any other company; or

(ii) any other company with the sick company;

(d) takeover of the sick company by a solvent company;

(e) the sale or lease of a part or whole of any asset or
business of the sick

company;

(f) the rationalisation of managerial personnel,
supervisory staff and workmen in accordance with law;

(g) such other preventive, ameliorative and remedial
measures as may be

appropriate;

(h) repayment or rescheduling or restructuring of the debts
or obligations of the sick company to any of its creditors or class of
creditors;

(i) such incidental, consequential or supplemental measures
as may be necessary or expedient in connection with or for the purposes of the
measures specified in clauses (a) to (h).

 

Appointment of interim administrator

Sec 256 of the Companies Act 2013

 

(1) On the receipt of an application under section 254, the
Tribunal shall, not later than seven days from such receipt,—

(a) fix a date for hearing not later than ninety days from
date of its receipt;

(b) appoint an interim administrator to convene a meeting
of creditors of the company in accordance with the provisions of section 257 to
be held not later than forty-five days from receipt of the order of the
Tribunal appointing him to consider whether on the basis of the particulars and
documents furnished with the application made under section 254, the draft
scheme, if any, filed along with such application or otherwise and any other
material available, it is possible to revive and rehabilitate the sick company
and such other matters, which the interim administrator may consider necessary
for the purpose and to submit his report to the Tribunal within sixty days from
the date of the order:

 

Provided that where no draft scheme is filed by the company and a declaration
has been made to that effect by the Board of Directors, the Tribunal may direct
the interim administrator to take over the management of the company; and

(c) issue such other directions to the interim
administrator as the Tribunal may consider necessary to protect and preserve
the assets of the sick company and for its proper management.

 

(2) Where an interim administrator has been directed to
take over the management of the company, the directors and the management of
the company shall extend all possible assistance and cooperation to the interim
administrator to manage the affairs of the company.

 

Companies (Winding up) rules 2020

Companies (Winding-up)
rules 2020

Part I

1. Short title commencement and
application

2. Definitions

Part II

Winding-up
by Tribunal

3&4. Petition for winding up&
statement of affairs

·        
for
the purpose of sec272(1) the said company is to be filed a petition of winding
up in Form WIN-1 or WIN-2 as the case may be, in
triplicate.

·        
Every
petition is to be verified by an affidavit made by petitioner or members
representing the body corporates in From WIN-3

·        
Statement
of affairs, as required to be filled in duplicate under sec 272(4)  or 274(1) shall be in form WIN 4and the information there shall
not be more than 30 days prior to the date of filling

·        
Statement
of affairs in duplicate duly verified by an affidavit and affidavit of the concurrence of the statement of affairs shall be in WIN 5

5. Admission of petition

·        
Upon
filing the petition it is to be posted before the tribunal for admission of
the petition and fixing a date for hearing thereof and for appropriate directions
as to the advertisements to be published. The petitioner shall bear all the
costs of the advertisement

6. Copy of petition:

·        
Every
contributory of the company is entitled to furnish with a copy of the petition with
in 24 hours of his requiring after paying Rs.5 per page.

7. Advertisement of the petition:

·        
Notice
of the petition shall be advertised in any daily newspaper in English and in a vernacular language where the registered office of the company is located
within not less than 14 days before the date fixed for hearing, subject to any directions of the tribunal. The advertisement
shall be in Form WIN-6.

8. Application for leave to withdraw
petition:

·        
A
petition for winding up shall not be withdrawn after the presentation, without the
leave of the Tribunal subject to compliance with any order of the Tribunal,
including as to costs.

·        
An
application for leave to withdraw a petition for winding up which has been
advertised in accordance with the provisions of rule 7 shall not be heard at
any time before the date fixed in the advertisement for the hearing of the
petition.

9. Substitution for original
petitioner:

·        
Where
a petitioner

                                 
i.           
is
not entitled to present a petition or

                               
ii.           
fails
to advertise his petition within the time prescribed or

                             
iii.           
consents
to withdraw the petition or

                            
iv.           
to
allow it to be dismissed or

                              
v.           
fails
to appear in support of his petition when it is called on in tribunal on
original day fixed or adjourned for hearing 
or

                            
vi.           
if
appearing does not apply for an order in terms of the prayer of his petition or

·        
where
in the opinion of the tribunal

                                 
i.           
there
is other sufficient cause for an order being made under this rule,

                               
ii.           
the
Tribunal may, upon such terms as it may think just, substitute as petitioner
any other person who in the opinion of the tribunal would have a right to
present a petition, and who is desirous of prosecuting the petition.

10. Procedure for substitution:

·        
if
the tribunal makes the substitution of the petitioner in a winding-up petition

                               
i.           
it
shall adjourn the hearing of the petition to the date fixed by the bench and

                             
ii.           
direct
such amendments of the petition as may be necessary

a.      such contributory shall within
7 days from making of the order amend the petition accordingly and

b.      File 2 legible and clean
copies thereof together with an affidavit in duplicate stating the grounds on
which he supports the petition.

·        
The
amended petition shall be treated as a petition for winding up of the company

·        
It
shall be deemed to have been presented on the date on which the original
petition was presented.

11. Affidavit-in-objection:

·        
Any
affidavit in objection of petition u/s 272(1) shall be filed within 30 days
from the date of order

·        
A
copy of the affidavit shall be served on the petitioner or his authorized
representative

·        
Affidavit
shall also be given to any contributory appearing in support of the petition that
require on paying Rs.5 per page within 3 working days.

12. Affidavit in reply:

·        
An
affidavit in reply to the affidavit in objection to the petition shall be filled
within 7 days before the day fixed for hearing of the petition.

·        
A
copy of the affidavit in reply shall be filled on the day of filling thereof to
the person affidavit in an objection was filled with his authorized representative.

BINARY OPTIONS

·         Digital options

·         Fixed return options

·         All or nothing options

For few years binary options are traded at OTC (over the counter). In 2008 securities exchange commission (SEC) in US approved listing of binary options with continuous quotation and now binary options also available to individual investors

ü  Predictions of directions of price of underlying asset (stock, commodity, index, currency) with in expiry time

ü  No purchase or sale of underlying asset.

ü  Two possible outcomes

1.       Fixed gain – if expires – In the money

2.       Fixed loss – if expires – out of the money

Binary options trade

1.       Choose expiry time. (Minutes, day, week).

2.       Choose call or put

Ø  If u think price goes up Buy/Call.

Ø  If u think price goes down Sell/Put.

3.       Wait for expiry.

Ø  If the expiry is in the money – profit

Ø  If the expiry is out of the money – loss

Decisions

ü  Decision on underlying asset

·         Selection of assets for trading from different financial markets

·         What asset to trade has to do with the opening hours of various world stock exchanges

Basic four classes of assets

·         Commodity:  gold, silver, wheat, coffee, oil, platinum, etc...

·         Stocks:  city (US), apple (US), Google (US), etc...

·         Forex (currencies): 24hrs a day. GBP/USD,  USD/JPY

·         Indices (indexes): dow, s&p500, NasdaQ (us),  dax (germany).

Decision on amount to invest

Ø  The amounts you devote to trade should be dictated by risk management plan

Ø  Binary option brokers allow for low minimum investment

Deciding on the desired time frame

Ø  Binary options are short term investment instrument by definition

Ø  Time frame available is one minute to one week

Ø  Depending on trading plat form

Ø  Very small time frame one min and 5 mins

Ø  Possibly experiment a lot NOISE result of hedge funds activity

Ø  15 minute time frame is the best suggestion

Ø  This is the small enough to capture nice moves but big enough to eliminate the noise in the market and correctly the true trends

Ø  While preparing trading strategy it is best to experiment with various time frames

Ø  A trading strategy might work on larger time frame but not on small time frame “vice versa”

Deciding on types of trades

Major trading types

      Above/ below

      Buy / sell

      Call / put

Touch up and touch down

Ø  Touch the high strike price or low price

Ø  If it touches that within the expiration time the option expires in the money

 RANGE

 Range options will have a predetermined upper and lower boundary when buying a range option the buyer has to predict ‘in ‘or ‘out’

If more volatile -out

No or less volatile -in

ADDITIONAL FEATURES

Close now - allows you to close an option before time of expiry if the option not performing as planned

Extend – roll over allow you to exercise to extend the time of expiry in order to increase the odds of being IN THE MONEY

ADVANTAGES AND DISADVANTAGES OF BINARY OPTIONS

Advantages  

Risk control –

Ø  initial investment is fixed from the beginning thus amount of possible profit and loss is well known

Ø  You will never lose more than what you expected can determine your risk as completely as is possible there is a limit on how much earned or lost

Ø  Short time trading – daily hourly

Ø  We can decide the expiry time of the option will be it can be END OF THE WEEK or END OF THE MONTH

Ø  However most trades would prefer shorter time frames

Ø  Low minimum amounts binary brokers have low investment minimum thus allowing you to start with small amounts

Ø  Can start trading with 10 dollars

Online trading – all you need is a computer with internet access

Simplicity – very simple and straight forward all you need is to decide o which directions the asset moving

The main disadvantage is fee its morethan a spread the brokers fee is embedded in the bussines model if a binary options brokerage

BINARY OPTION TRADING RISK MANAGMENT

·         Not to risk too much money on any given trade

·         Many traders trade without thinking about risk they take only about the potential rewards

·         To succeed take in to consideration the maximum % of total trading money that you should risk in any one trade

·         Actually your ability to limit your losses is equally critical as your success in managing winning trades

3 tips to minimise risk and increase payouts

1.       Don’t trade with money that you cannot afford to loose

2.       Never borrow money while trading trade only with your own money

3.       Set and stick to a budget write it ... if you hit that no. quit trading for the day

4.       When you enter a trade , no matter how great it may be, always ensure to only invest conservatively

5.       It mean that you should not use more than 5% of your capital on any single trade

6.       There is always a risk factor involved conservative investment strategy helps you to conserve your money when things go wrong

7.       Never put all the eggs in the same basket

8.       A good money management strategy requires diversification ( currency and commodity)

9.       Losses needs to be stepping stone instead of having it affect you

10.   Certainly do not fall for the emotions and commit your entire amounts right away on one trade

11.   Investing small amounts continually helps you to take a self disciplined approach

12.   Use the advantage of minimum capital for trade

13.   Trade in small amounts until you have the sense of the assets that you are trading

14.   This can gradually increase your self confidence levels helps to automatically be aware of indicators and be able to prepare your investing strategy and ultimately help reduce the losses

15.   There will be a thin line between gambling and trading.

WHAT YOU NEED TO SUCCED IN BINARY OPTIONS

1.       Need to learn charts and how to read charts. charts are the main weapon in winning the binary options

2.       Any valid strategy involves reading and analysing charts they are  not hard to read and understand

3.       The most basic form of technical analysis would be look for SUPPORT and RESISTANCE levels charts in this way works best in moderately volatile market

4.       Another simple way of using charts is to look at moving averages such as the average price over 10 days

5.       It is better presentations of what the price is doing over a longer period of time

6.       Another simple pattern is RSI relative strength index

This highlights the situations where the market is

1.       Over bought

2.       Over sold

3.       Works potential reversal of trend

1.       RSI is the total points gained on up days divided by total points lost and gained multiplied by 100

2.       Pick a user friendly platform you will need a system that lets you back test strategies and program customised indicators and trading system without a lot of difficulty

3.       Pick a reputable company

4.       Select a provider which has superb customer service

SUPPORT

Support represents the level where buying pressure is powerful enough to absorb and overcome selling pressure

At support levels buyers move in to the market mopping up the imbalance between supplies (sellers)

And demand (buyers)

So that when it happens the price will stop fall and may probably rise.

Resistance opposite to support levels

Where volume of selling (supply)exceeds

Wher volume of buying (demand)

Simple moving average

It calculates the average price over a specific moving time period

Ex: 50 days SMA (simple moving average ) = avg mean price of last 50 days.