Court documents filed this month reveal that the NYSE is backing the flash trader, the largest operating on the exchange, in a lawsuit to overturn the Securities and Exchange Commission’s approval of a trading method launched by Investors Exchange group (IEX), which was made famous by Michael Lewis’ book Flash Boys.

It comes as Citadel Securities’ relationship with Robinhood was put under a microscope following the GameStop frenzy.

The SEC approved IEX’s Discretionary Limit method in an attempt to eliminate latency arbitrage, the practice of a market maker exploiting a time disparity to make a profit, narrowing the gulf between traditional and algorithmic traders.

However, in court documents filed earlier this month, lawyers for the NYSE argued that the approval would cause “unfair discrimination” between competitors and accused the securities regulator of signing the method off “without considering its impact on the national market system for cash equities securities or its impact on other exchanges”.

It submitted the evidence in support of a lawsuit filed by Citadel Securities in February which claims that, in addition to competition concerns, the SEC had “ignored” evidence that retail investors would be “harmed” by the Discretionary Limit order.

It added that half of its trading activity on IEX was not for its own profit but for retail investors.

Citadel Securities is Robinhood’s most used market maker and pays the popular stock trading app for customers’ trading orders.

Sister company and hedge fund, Citadel, came under fire on Jan 28 when rumours spread claiming it had forced Robinhood to restrict trading of GameStop and other shorted stocks during market volatility.

Frustrated that they could not buy GameStop shares as the price continued to rise, traders took to social media to point out that Citadel handed a lifeline to Melvin Capital, which lost more than hall of its investment when traders pumped up the price in an attempt to damage short sellers.

Ken Griffin, Citadel’s founder, denied any involvement in Robinhood’s decision.

Robinhood chief executive Vladimir Tenevlast week told US politicians that the company restricted trades because it was unable to provide the capital needed for regulators when trading volumes surged.

• GameStop Corp