This statement reveals that you do not understand what is happening when a transaction occurs. The price is simply the market clearing price. It is not as if updates are being published, simply that the correct price is being discovered more rapidly.

If you think of the price erroneously as something that has been published, then of course there is nothing beneficial about speeding up the transaction turnaround time.

But if you think of each transaction (and every participant willing to transact for close to the clearing price) as a vote that the price being transacted is close to accurate, then the more participants and volume available amount to significantly more information than was previously available.

Imagine if trades were available only once per hour. Consider the kind of spread would a market making firm have to utilize to avoid losing money!

Speeding up the market adds additional efficiency and reduces inventory risk for market making firms, increasing information and liquidity for all.

These votes are not an indication of accuracy though are they? they are gambles about future price discovery. As in they don't care if they think the trade is worth $5 if they think it might go up before crashing to what they really think it is worth.

I'm not very knowledgable about HFT so I'm just trying to reason about how it works. I guess it's the concept that without the higher frequency everything must be more unstable which is hard to grasp. It reads like we have to make it easier for these firms to make more money so everyone else can enjoy the 3rd order effects of the process.

That may be the case, but the 'problem' is caused because market makers aren't legally allowed to offer better prices than they might otherwise desire. It doesn't seem prudent to layer flawed regulation on top of flawed regulation when there's a simpler solution.

> Remember the market is ultimately about allocating capital between businesses and governments

Equity markets have many purposes. Companies indeed raise money by issuing equity (IPOs and secondaries), and there are cases where governments participate for monetary purposes (BoJ & SNB's equity purchases). But markets also allow:

* employees to sell equity compensation they've received whenever they want

* retail investors to diversify their asset allocations

* sovereign wealth funds, pension funds, endowments, and other real money sources return on their portfolios

* for hedging financial risks

* companies to return money to shareholders in the form of buy backs

> for economic purposes it doesn't need to run any faster than they can

All the previously mentioned functions happen all the time, and the marks (prices) generated from this activity helps inform many other economic functions. Everything from central bank policy to insurance pricing depends on well functioning markets. In light of this, why should we make things less efficient by slowing things down and driving the cost up?