Exactly, PFOF does not involve selling data. The spread available on the stock market reflects the potential toxicity of random orders to market makers; it is risky to market make large volumes of a security to an unknown counterparty (who might know more than the MM). The spread pays for this risk.
It is not as risky to market make securities for retail investors; they probably don't have insider knowledge and are low-volume. So, PFOF routes retail orders to the market makers, where it likely executes at a better price/spread than the public market and also gives the brokerage a tiny commission in the process. And is still regulated by NBBO...
It is not as risky to market make securities for retail investors; they probably don't have insider knowledge and are low-volume. So, PFOF routes retail orders to the market makers, where it likely executes at a better price/spread than the public market and also gives the brokerage a tiny commission in the process. And is still regulated by NBBO...