You know HFT isn't identical to any electronic exchange, right. I haven't evaluated in great depth whether Lewis is correct or not. But I'm pretty sure you can't defend HFT solely on the basis of "this is inevitable" (after all exchanges makes elaborate and special allowances for HFT, it's not a strategy you can sit at home and do). Any market is based on rules. If, for example, every transaction, no matter how quick or small, involved a small fee, I don't think HFT could exist as it does now.
Again, the point isn't that I've prove HFT should be banned but rather that like any other construct, it needs to justify it's existence rather than talk about inevitability - sort of like you defend patents if you want but you can't defend based on property rights.
http://qed.econ.queensu.ca/pub/faculty/milne/322/IIROC_FeeCh...
It hurt the little guy, raised costs, and allowed the big guy to more easily hide their orders.
Big investor. If you are a retail investor, the HFTs don't know about you until after your 2 lot trade is finished.
Doesn't that obfuscate the fact that most retail investors interact with the market via various funds and intermediaries - which in turn collectively makes them a "big" investor?
Little investors = all little guys.
Lewis is shilling for a group which is disproportionately not the little guy.
Further, skewing the market in favor of the big guy is just a way to ensure that the big guys can rip off the little guy. Once the little guy is forced to subsidize liquidity for the big guys (as Lewis wants), he might as well just pay a mutual fund the 50bps management fee rather than managing his own 401k.
What are you talking about? Who are these 'insiders'? Anyone is free to build a trading system that uses speed as an asset if they have the will and ability to. Speed of information used to be considered a noble thing for traders to invest in.
Also, I will reiterate: HFTs NEVER get fills on quotes that are worse than any other participant on the same exchange. That violates RegNMS, and is straight up illegal.
An allegation made in Dark Pools was that the existence of the order types was initially deliberately concealed from most actors in the market. The claim was well substantiated, from what I could tell.
[0] http://online.wsj.com/news/articles/SB1000087239639044398920...
"concealed", in this context, just means "too lazy to carefully read the documentation".
I get scared of what Lewis is saying in the same way it scares me when I hear of school districts banning the teaching of evolution. I'm not scared that Lewis is right. I'm scared that his misinformed screed will actually gain traction.