And yes, debit balances can happen, when either broker or exchange slap a margin of 120% instead of normal margin on your in profit future positions, and that too without any information.
All others are paying normal margins as per margin file but you have to square off your in profit trade because you will not be in a position to pay 120% margin. And moreover you have to pay an hefty penalty because of this, as you will fail to deposit that hefty additional margin and that too in a short period of time, even if informed.
Am I right Sachin.
SPAN margin files are sent by exchange 5 times in a day... Margin requirement won't ideally go up to 120% without any particular reason..
The only reason the SPAN can change intraday so much is if the stock does a major jig.. For example on the day Satyam lost almost 70%, SPAN margin requirement actually went up 3 times from the first file in the morning to the last file before closing...
What I have cited above is a real case, that happened with one of my friend with a renowned broker (It was not on Satyam day) It happened just recently (3-4 months back) and that too in a nifty trade.
He had a long position of 2 lots of Nifty, and was in good plus side, has much more than margin requirement in his trading account. Unaware of the reality he sent some amount so as to add further position. The next day when he tried to place the order, the orders were rejected repeatedly due to short of funds.
And when he contacted the broker on phone he came to know that the amount he sent was adjusted to his margin account. Nobody there was ready to explain the actual situation. Later on, he came to know that his margin requirement was enhanced to some 7 lakhs (and no information was given to him to this effect, moreover, even if he would have been informed before hand, he was not in a position to deposit this hefty margin) and he had to pay additional money and only then he will be allowed to trade.
When he discussed this situation with one of his friend he suggested him to square off his position, so that the margin money already paid, would be released and he could buy in cash stocks. He squared off his position and thought that trouble has ended.
But no, it was not so, he was slapped with a hefty penalty (in thousands) (this also without any information) for this trade, and he came to know about this penalty and the margin slapped, after he received his monthly/ quarterly statement). He doesn't know who got this penalty amount, the broker or the exchange.
So, Sachin, what is your opinion on this.