What you've said sounds very reasonable to me. I find it interesting that the line of reasoning you have presented doesn't appear to require super-fast trading.

What you've said sounds very reasonable to me. I find it interesting that the line of reasoning you have presented doesn't appear to require super-fast trading. That there has been an "arms race" to become faster and faster fits perfectly, because the competition is over who is the fastest market maker. Given that the skill of people/firms engaged in that race has been to be as fast and smart as possible, it also makes sense that they would be less than enthusiastic about any limitation on their competitive abilities. Neither of those points, however, implies that being able to trade as quickly as possible is actually "useful" to the wider market - only that it is a consequence of that market. It seems possible that there is a lot of effort being put into that endeavour that is, in some sense, wasted - it is spent on competition rather than "production", and with a judicious rule change the cost of competition could be reduced. The inevitable free market counter-argument is that the market will have already selected the best balance of cost/benefit, but I don't find that convincing at all, even if only because obtaining a sufficiently free market is impossible. Anyway, thanks for your response, it certainly seems (to a layman such as myself at least) to be a good description of the basis for HFT.