Oh, just because it hasn't happened yet, we should pretend it isn't possible? You remember the flash crash. That took out the market for a day. People waved their hands and said it was an innocent mistake. Nothing changed.
When scads of people were writing CDO's and swaps and other clearly garbage papers in 2007, they probably used your logic to justify their recklessness, and here we are.
Oh, just because it hasn't happened yet, we should pretend it isn't possible? You remember the flash crash.
You mean the minor event precipitated by a fat fingered human and corrected in an hour or so by HFTs?
If you have a plausible disaster scenario involving HFT's, state it. So far, near as I can tell, your argument is merely "omfg finance stuff I don't understand it might destroy the world!"
The flash crash was not precipitated by a "fat finger" event but rather an intentional, albeit aggressive, move by one mutual fund, and according to regulators it was exacerbated by HFT's, not "corrected" [1][2][3][4]. Do your research--like so many you probably believed the BS that was handed out to pacify everybody when it was big news, and missed the SEC/CFTC report that came out later. More recent mini-crashes have occurred in commodities markets [5], again driven by HFT.
What is my disaster scenario? Do I really need to explain why extreme volatility can vaporize investor confidence in a market? If an event like this was caused by one market action, you can even imagine malevolent investors trying to intentionally trigger a crash or a mini-crash (holding a short position on the side so that they profit). If enough people are able to do this with regularity, the market turns into /b/ and becomes worthless for traditional users. I won't pretend to have enough imagination to see all the ways this could go wrong; we can leave it up to Wall Street to make it a reality. It would seem like common sense, however, that if neither investors nor regulators have a firm grip on the steering wheel (and maybe that's the best way for the economy to run, who am I to say?), we would be better off not putting the market in cruise control at 600mph without carefully considering all the ramifications.
When scads of people were writing CDO's and swaps and other clearly garbage papers in 2007, they probably used your logic to justify their recklessness, and here we are.