Depending on the market and the instrument traded, it can be very rare for "natural liquidity" to generate trades (e.g. mutual fund trades with individual inves

Depending on the market and the instrument traded, it can be very rare for "natural liquidity" to generate trades (e.g. mutual fund trades with individual investor through their brokers) and most traded orders interact with some sort of liquidity provider. In these cases, the HFT firms tend to step in front of market makers who are less technically savvy and take the money from them. In this case, customers tend to get better prices on their orders. One of the big misconceptions about "flash" orders was that customers were being disadvantaged; many customers actually wanted this feature so that they could continue sending volume to more technologically advanced markets such as BATS and Direct Edge and avoid being forced to send to e.g. NYSE (which was very slow) by "trade through" regulations. I've been in the position of wanting this service, and I suspect that most of the criticism came from older markets that were unwilling to invest in technology and change their rules to facilitate faster customer trading.