Author would benefit from a closer reading of the M. Lewis piece. It's well researched far from trivial. What's interesting about it is that it tells the story

Author would benefit from a closer reading of the M. Lewis piece. It's well researched far from trivial. What's interesting about it is that it tells the story of how outsiders modeled the various ways to rip off <institutional> traders. They did this first and the empirically pattern-matched observed behaviour. They then did both physical and social market-micro-structure studies. Lets take a look at this section (From attached article): The fact of the matter is that HFT’s can’t rip you off. You are never under any obligation to do business with them. In spite of that, lots of sophisticated investors voluntarily pay HFTs every day. An important question for all the critics of HFT to grapple with is, “why do sophisticated investors voluntarily pay for something useless?” This comes right after the section on why people don't adopt obvious strategies (use limit orders, etc): Why doesn’t everyone do this? This is an obvious question to ask. The answer is, quite simply, execution risk. Execution risk is the risk that you place an order but your trade never actually happens. The Analysis Lewis outlines in his book shows that HFT is specificially engineered <to create execution risk>. It engineers artificial scarcity (the opposite of liquidity). Empirical study from Lewis's book: Finally [The Trader] complained so loudly that they sent the developers, the guys who came to RBC in the Carlin acquisition. “They told me it was because I was in New York and the markets were in New Jersey and my market data was slow,” Katsuyama says. “Then they said that it was all caused by the fact that there are thousands of people trading in the market. They’d say: ‘You aren’t the only one trying to do what you’re trying to do. There’s other events. There’s news.’ ” <If that was the case, he asked them, why did the market in any given stock dry up only when he was trying to trade in it?> [emphasis added] To make his point, he asked the developers to stand behind him and watch while he traded. “I’d say: ‘Watch closely. I am about to buy 100,000 shares of AMD. I am willing to pay $15 a share. There are currently 100,000 shares of AMD being offered at $15 a share — 10,000 on BATS, 35,000 on the New York Stock Exchange, 30,000 on Nasdaq and 25,000 on Direct Edge.’ You could see it all on the screens. We’d all sit there and stare at the screen, and I’d have my finger over the Enter button. I’d count out loud to five. . . . “ ‘One. . . . “ ‘Two. . . . See, nothing’s happened. “ ‘Three. . . . Offers are still there at 15. . . . “ ‘Four. . . . Still no movement. . . . “ ‘Five.’ Then I’d hit the Enter button, and — boom! — all hell would break loose. The offerings would all disappear, and the stock would pop higher.” This is why it's being investigated by the FBI, in addition the other issues (front running, NPI, etc). "There are many people in government who are very focused on this and who are concerned about it and who think it breaks the law," an FBI spokesman said. "There is a big concern that high-frequency traders are getting material nonpublic information ahead of others and trading on it."