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

While carrying forward derivative positions using collateral margins is possible, exchange regulations mandate that all Mark-to-Market (MTM) settlements must be cash-based. A negative balance in funds statement indicates an MTM loss, which must be covered by a cash transfer before any further trading can be permitted. Trading and taking on new positions while maintaining a negative balance would effectively mean that the derivative trades are being financed by the stockbroker, a practice that is not permitted by the exchange.

To prevent this situation, new trades are blocked if the cash balance is in the negative. This means that taking new positions in equity intraday and F&O positions will be prohibited. However, squaring off existing positions will still be allowed as usual.