> There wouldn't be quant trading firms without leverage, extended by a prime broker.
Please allow me to disagree :) Most larger pure-algo HFT prop shops are self-clearing, they are exchange members (possibly with more favorable fees due to market making) and don't use pbs, instead relying on their own co-located execution infrastructure and funding.
This is true for, as you said, large hft shops. But there are thousands of quant trading firms that are not on this scale and will not be an exchange member. You can see all the NYSE exhchange members here [0], and it's a very small portion of all quant funds.
Managing margin and leverage between prime brokers is an important job for the backoffice at the fund I work for. These numbers are watched very closely, and we have strong, multiyear relationships with the people who work at these PBs.
It really depends on the trade, and what margin offsets you can use. Simplest case is everything in a single exchange, with full margin offsets. If it is split in a way that several exchanges or regulators require capital to be posted, then you need to sort out financing somehow.
A lot of that trading activity is still leveraged even if self-clearing. Futures/options trades are based on margin for instance, e.g. $4800 ES margin vs. $140,000 (50x2800) notional means 29:1 leverage.
Please allow me to disagree :) Most larger pure-algo HFT prop shops are self-clearing, they are exchange members (possibly with more favorable fees due to market making) and don't use pbs, instead relying on their own co-located execution infrastructure and funding.