It's not about speed for the sake of speed. That speed allows insider trading and frontrunning.
Insider trading means[0]:
buying or selling a security, in breach of a fiduciary duty or other
relationship of trust and confidence, while in possession of material,
nonpublic information about the security.
How do HFT traders get "material nonpublic information"?
The Wall Street Journal reports that HFT funds buy early access to data
from third-party distributors—everything from corporate earnings to
the Philadelphia Fed's manufacturing survey.
If an analyst at the Philly Fed tells me the results of the manufacturing survey two days in advance of its release, and if I profit from that information and give a kickback to the analyst, that would be clearly illegal.
But if the Philly Fed gives the information to Reuters ten minutes early so they can write a story, and if Reuters sells electronic access to HFT traders two seconds before the public can trade on it, how is that different?
And don't get me started about using HFT for frontrunning client orders[1, 2].
Early access to research reports is not insider information and is not in general illegal.
First, presumably the report was generated from public information so it is not non-public. Second who are the parties involved in a breach of "fiduciary duty or other relationship of trust or confidence"?
Insider trading means[0]:
How do HFT traders get "material nonpublic information"? If an analyst at the Philly Fed tells me the results of the manufacturing survey two days in advance of its release, and if I profit from that information and give a kickback to the analyst, that would be clearly illegal.But if the Philly Fed gives the information to Reuters ten minutes early so they can write a story, and if Reuters sells electronic access to HFT traders two seconds before the public can trade on it, how is that different?
And don't get me started about using HFT for frontrunning client orders[1, 2].
[0] https://www.sec.gov/answers/insider.htm
[1] http://blogs.barrons.com/stockstowatchtoday/2013/05/03/charl...
[2] http://www.nanex.net/aqck2/4442.html