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I've also wondered the same thing. I've always been replied to with "it provides liquidity to the market" but I still don't see why anybody needs microsecond level liquidity. Seems like it provides marginal benefit over a minute or hourly quantized exchange at tremendous cost (to society).

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Ordinary traders obviously don't need microsecond level liquidity. But having microsecond level liquidity allows more market makers to compete with each other to provide liquidity. This competition lowers the prices ordinary traders pay for liquidity.

TLDR: Compounding effects that add up over time, and extremely dubious use of the words "tremendous cost (to society)."

HFT is a tax on the markets (and by extension society).

I mean...that's kind of a hugely controversial point to just say as a fact. It also completely ignores the fact that HFTs employ a lot of different strategies, some of which are uncontroversially beneficial to the market (market making).

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