Doesn't matter. There is still the incentive for low latency.

A much smaller and less exploitable incentive. A few milliseconds of info from other news sources is not abusive as far as I know. Unlike the ability to react to pending trades before they happen.

You are obviously not involved in the trading. A few milliseconds definitely matters. And how would you react to a "pending" trade before it happens?

I think you are conflating two types of information that can be taken advantage of:

1) Information about other orders coming into the system 2) Information about world events that may affect stock prices

The whole point of HFT is extracting maximum information from (1) and using it to make money (supposedly from slower market participants). That is what batch auctions would remove.

Nobody minds if people make money from the second type of information - but it is many orders of magnitude less frequent (ie how many times a day are there economic releases or earnings posted)?

Then why are people investing massive amounts of money to shave milliseconds in communication times between trading markets (London, Tokyo, NY, Chicago)?

They are all attempting to gain an edge on correlated inter market differences.

The ONLY reason HFT companies invest money to shave milliseconds is to have quicker access to orders that come into the system (this article elaborates: http://blogs.wsj.com/marketbeat/2012/09/20/collocation-the-r...)

It absolutely has nothing to do with reacting to real-world events. So if all activity were to take place at 1 second intervals (kind of like microprocessor clock) - their main advantage would go away.

That only matters because both exchanges have the same problem. I think it is definitely true that if both exchanges ran on a synchronized 1 second schedule the advantage would go away, because the information from the previous round would be uniformly available early in the next.

It is less clear to me whether fixing just one exchange fixes both or neither.