For exchanges, there are glimmers of hope for a long-downtrodden business:  cash equities.

It’s by no means a sea change, and the improvement has yet to manifest itself in the all-important metric of trading volume. Rather, it’s a function of exchanges seeing a higher-quality mix of order flow, with less from high-frequency traders and more from traditional traders and investors.

There are emerging signs that “high-frequency traders are backing away, and more funds and buy-side customers will help in volume recovery overall,” an exchange representative said. “If you were bullish on that assessment, you could make the assumption that it would be positive for total volume and fuel more interest in public offerings.”

U.S. cash-equity revenue capture improved in the second quarter at the two biggest U.S. stock exchanges, and the trend could continue if steadier fundamental volumes continue as a supportive factor.

Nasdaq OMX’s cash equities trading fees increased 9.8% in the second quarter compared with the year-earlier period, after falling 19% in the first quarter of the year on a rebate program and reverse pricing, analysts Niamh Alexander and Kyle Voigt of Keefe, Bruyette & Woods noted in a report. At NYSE Euronext, cash equities fees increased 9% in the second quarter.

Nasdaq is seeing “positive signs of a more favorable environment,” chief executive Robert Greifeld said last month on a conference call to discuss second-quarter earnings. “Equity market volume continue(s) to see modest but steady improvement. While we would still describe overall equity market trading and IPO volumes as tepid, what we’re seeing is certainly indicative of a recovering economy, and continued flows into equity investments is a positive development.”

For an exchange, volume from institutional and retail investors is more profitable than is high-frequency trading business, and it’s also seen as more sustainable. “This could potentially be the beginning of a trend, with fundamental volumes recovering,” Alexander told Markets Media. That could offset reductions in business from high-frequency traders, who receive more discounts and rebates.

Exchanges’ cash equities rate per contract recovery deteriorated from 2007 to 2009, then stabilized, then dipped again, Alexander told Markets Media. The metric “turned recently” with a more favorable business mix, the analyst said.