Why is the error ‘Your account has a negative cash balance’ displayed when placing an order?

While you can carry forward derivative positions with collateral margins, it’s important to note that according to exchange rules, all Mark-to-Market (MTM) payments must be made in cash. If your ledger balance is negative, it indicates that you’ve incurred an MTM loss. In such a case, you’ll need to transfer cash to cover this loss before further trading is allowed.

Trading or taking new positions with a negative balance is not permitted, as it would essentially mean that your derivative trades are being funded by the stockbroker, which goes against exchange regulations.

To ensure compliance and prevent unauthorized funding, we block new trades if your cash balance is negative. This restriction applies to new positions in equity intraday, F&O positions (NFO and CDS). However, you can still square off existing positions normally.