[smabie]

First of all, most market making firms that buy order flow are not hedge funds, they are proprietary trading firms. They trade their own capital, not their investors' capital. Second of all, payment for order flow is massively beneficial for retail investors. If you look at the price improvements being offered, the zero commission, and the tight spreads being quoted, the vast majority of retail investors are benefiting greatly from this arrangement. If however you are trading large lots (hundreds of thousands of dollars worth), then the marking makers start to become somewhat more menacing.