> They provide faster and more cost efficient liquidity, thus "bringing down the spread" which will push out maybe not all but certainly the lesser privileged conventional traders. This is foremost negative for the effected traders and not per se for the public but as the pessimist that i am, i cannot help it but see it as just another way of market consolidation, of monopolization in the worst case.

They are only "pushing out" other liquidity providers. If you are a medium/long term investor you are not competing with HFTs. Yes, if you want to be day trader HFTs might make your life harder, but I think from society's point of view that's fine.

> The only way to seriously compete with such HFTs, is to do it as they do, which requires the same physical accesses to the markets. Previously, the access to valuable (insider) information was a privilege for slow traders and a way to get an edge. Speed and algorithms are imo just a new privilege, enabled by technology.

> The simple reason why insider trading is illegal, because it puts other marketeers at a disadvantage, they have no means to compensate. The same is true for HFT. You cannot rent the rack next to the markets machines when its already occupied.

There is no principle that all market participants must been on equal footing. That would be impossible to enforce, and counterproductive to boot. If you are a slow (non HFT) trader at a big fund or bank you also have a lot of advantages over a guy doing it from home: better financing rates, more market access, a whole infrastructure to provide you with information and analysis, etc. Should that be made illegal as well?

What about if you are just a better trader? Should you be somehow given a handicap so others can compete with you?

As I said in another reply, in every field of human activity, professionals are advantaged over hobbyists, and that's fine.