I talked about this at length with a retired quant back when the news about HFT shops first went around. The basic view is that HFT increases liquidity, which

I talked about this at length with a retired quant back when the news about HFT shops first went around. The basic view is that HFT increases liquidity, which in the abstract should help everyone. My friend's view was, first, that privileged access, special order types, etc, were so egregiously wrong it need not be discussed further. Second they found the liquidity argument weak, and in general believed that signals on such short timescales were often more harmful than beneficial. They preferred a solution similar to yours, quantizing the markets by time and having one formally specified "fair playout" algorithm within the quanta. Pick the quanta such that it makes global communication time irrelevant (ie a few seconds). There's some subtleties to it but they considered the idea both workable and superior to what we have now. I have to be somewhat circumspect for privacy, but this person was quite successful at stat arb, and in a previous life very successful at finding zero days in kernel code. I generally believe they know what they're talking about in great depth on the topic. They're exactly who'd be near the top of your list of prospects if you wanted to set up a HFT shop.