You are aware that HFT is essentially dead? It isnt profitable anymore and most of those firms are failing. Trading situations that allow for easy outsized profits like that disappear very fast.
The amount of disinformation surrounding HFT is staggering.
Stuff like antibiotics, electric lights, refrigeration, washing machines, phones, computers all have all led to direct and immediate quality of life improvements. Often on the order of a tenfold improvement for that activity, and they are easily within reach of the majority of the population.
What would become 10x worse for the average person if HFT were to vanish overnight? Would mortgage rates massively spike? Would bond rates plummet? Is there some quantifiable financial thing that would regress to whatever terrible situation we were in back in 1990 before HFT was substantial?
Since 1990, US population has increased 30% while the (inflation corrected) GDP has increased 90%. So something improved. I'm going to (arbitrarily) say it was computer literacy, since home PC ownership went from 15% of households to 85% of households in that time period.
What can you counter with to say that the improvements were from market efficiency? If we never had HFT, how much lower would the GDP be?
It sounds like you saying that private companies that don't participate in the stock market are incapable of managing capital or achieving growth.
401k is a great indicator, but I'm not sure it makes HFT look very good. The median trade time is more than 1000x faster than in 1990. But people's 401ks are not doing 1000x better. Did we hit a point of diminishing returns long ago? If so, is HFT pointless?
I feel like you are conflating HFT with electronic trading. Electronic trading can be HFT or slow, either way it is cheap and cuts the middleman out.
You seem to have this backwards notion that they need to justify their existence, they don't, they're just traders executing their rights to buy and sell like everyone else. It's those like you seeking to regulate HFT that need to justify yourselves. You don't even understand what HFT is really as you're asking basic questions like what does market efficiency mean and does HFT help it, and you think you're in a position to question someone else's trading habits? Really? HFT doesn't need to look good, those of you trying to punish them need to show some actual evidence they're doing something bad, but they're not and you can't.
Efficiency in a market means things are priced accurately and you're not getting ripped off when you buy or sell; if you find that vague and hand wavy, well, sorry but that's what it means and you should be able to understand that without further explanation. HFT traders make the price more accurate benefiting you and everyone else, they don't need to justify themselves, you need to justify your witch hunt against them.
HFT is a form of electronic trading, I'm not conflating them, they're just different forms of using tech to trade and there's valid reason at all to single either of them out as bad. HFT are market makers, they're providing you and everyone else liquidity for a vastly smaller fee than you've been provided it ever before. So say thank you to HFT, enjoy your cheaper trades and increased liquidity, and go find a real problem to complain about instead of attacking those who make your life better.
Yes, trades would cost a lot more. Every time your money was put into a stock, some middle men would take more of it than they do now. Trades would take longer, you might not get the price you thought you were getting when said buy or sell because the price might change in the time it took some dude to go manually buy or sell the shares you requested. That directly affects everyone with a 401k or stock. HFT has eliminated a large swath of useless middle men who were gouging you for money: those middle men are pissed they've been obsoleted and lost access to easily profit and are the now pushing to regular HFT, so they can go back to the good old days of bigger profits and more room for middle men taking a bigger bit of the average mans investment money.
HFT saves every market participant money, except the old school traders whom they've largely obsoleted.
Speed doesn't make money by itself anymore, so a lot of players whose only trick was being fast and not-so-smart are having problems.
We sponsored the x64 port of LuaJIT and kicked off a sponsorship system for it [1]. OpenResty took nginx and integrated it with LuaJIT. Ten years later, CloudFlare started using OpenResty and LuaJIT to protect massive swathes of the Internet. This kind of butterfly effect makes me smile.
The same HFT crew discovered critical issues in the circa-2009 Linux kernel, wherein there was significant packet loss on multicast workloads [2]. We were using bleeding edge Debian/Ubuntu distros whereas much of the industry used more stable kernels (which didn't have the issue). So because of our hard work, along with much love from the incredible Eric Dumazet, we figured it out and everybody benefitted (especially RedHat and SUSE who got to put the fixed kernel in their stable releases a couple years later).
We also sponsored other open source projects, Debian packaging, etc. HFT firms from 2006-2010 were early adopters of the advanced network and computing technologies that now power the clouds (e.g. Arista, Solarflare, various acquired storage/network companies); those companies might not be around now if they didn't get those early wins from the finance community.
[1] https://luajit.org/sponsors.html [2] http://www.spinics.net/lists/netdev/msg90771.html
The guys who were fined for manipulating the NASDAQ closing auction?
https://www.bloomberg.com/view/articles/2014-10-16/high-spee...