Until 2006, the New York Stock Exchange operated as a not-for-profit enterprise that focused on listing companies and facilitating stock trading. Since becoming profit driven, the Big Board has prioritised services to high-frequency traders in ways that I believe damage market integrity.
The exchange used to generate revenue mostly from listing and trading fees, but it now profits significantly from HFTs by charging them for high-speed data feeds and the right to locate their computers in close physical proximity to the exchange computers. Both those services, as described by Michael Lewis in his book Flash Boys, enable HFTs to place millions of rapid trades that get ahead of orders by regular investors and drain liquidity from the markets.
For today’s NYSE, volume is critical: HFTs need counterparties to trade with and the more trades an exchange hosts, the more data and services it can sell. So the NYSE now pays “rebates” (kickbacks, in my estimation) to high-frequency traders and brokers to place trades on the exchange. The rebates induce brokers to send client orders to the bourse to trade with HFTs. In most cases the broker, not the client, pockets the rebate.