How are the buying power considerations (margin obligations or whatever) handled for firms making markets in equities and quoting in dozens (perhaps hundreds) of names? I don't have experience in equities, so I'm working with the assumption that pending orders would indeed take up available buying power (please set me straight if this is wrong!). So, if that's the case, to be quoting decent size in lots of products, you're looking at 8 or 9 figures worth of buying power (could even be more). I can't imagine every shop has that type of balance sheet ... So, is this type of 'leverage' just handled by a PB? And they take some type of holistic view of the exposure, risk profile, etc.? Do PBs essentially afford their clients bespoke margin/risk requirements, freeing market making firms from the constraints of buying power their own balance sheet would entitle them to?
The large equity market makers/HFT firms are self clearing so they don't use a PB and so have to meet the minimum net capital requirements themselves. Latour got in trouble a few years ago for not having enough capital https://www.sec.gov/news/press-release/2014-199 Firms that aren't self-clearing that trade through a PB have risk limits based on number of outstanding orders/notional/amount executed/etc that one negotiates with them.