You’re guilty of what you accuse me of ...
Your premise is that the costs, spreads, and speeds would have dropped without HFT’s. I was in the business (not the HFT side), and I know this is not true. Much of the cost of trading is fixed in nature, and very high. Certainly, some of the spend was only there and done to accommodate the HFT’s “need for speed” (NYSE Mahwah data-center, for example, or NASDAQ selling data-center rack-space to trading firms (read: HFT’s), where the price of rack-space went up the closer your rack was to the matching engine rack). I think this should have been banned too - everyone should have level-field access to the exchanges. But, if my algo is better than yours, or faster than yours, or my trade idea is better than yours, that shouldn’t be punished or regulated.
The higher volumes of shares and trades gave an exponentially larger base over which to spread the high fixed costs. Without these larger volumes, the costs embedded in every trade would have been higher - and by more than the HFT’s costs add (IMHO).
And I certainly don’t agree that insider trading is OK. To the contrary - the markets can and should price efficiently when all PUBLICLY available information is known to the most market participants. Insider trading allows a participant to trade off of info that their counter-party doesn’t know and can’t know, which should be punished severely. That said, if they don’t know out of ignorance - well, that’s capitalism.
OK now I get it. It’s just like how much I have to pay the bank to transfer funds to another institution never went down because there were no high speed bankers to raise the volume. Oh, wait a minute, it did go down.
Or maybe it’s like how the cost of tv’s never came down because there was no one to electronically trade them a million times before they get to the customer. Oops that’s not it either.
Oh, well you must be right, the cost of trading technology would never have come down for the first time in the history of any endeavor involving technology. Thank God for those HFT guys. Is there someplace I can send them a card or maybe a gift?