The fundamental failure in this case is the failure of approaching the market from investor perspective, and this fundamental failure is incentivized by free money, just like the insane CEO pays and non-existing dividend yields.
The very reason WHY it is at all possible to trade stocks at these insane speeds is this: people do not see their purchases as investment, they are not looking for or getting dividend yields.
People who are purchasing stocks are not looking for an investment opportunity in the underlying business, they are looking for a way to flip the stock quickly and to make the money.
Automation of this process is INEVITABLE as all things that are repeatable and can be automated with some investment capital in order to make the process more efficient will be done. Investments will be made. Automation will remove the slow element in the equation - the human trader.
The fact that the stock market is now not providing investment opportunities, but is instead used to gamble in the hopes that the stock will move in the right direction (up or down), is based on the available amount of free (interest free) money that is provided into the financial system by the Federal reserve bank.
At this point that Bernanke promised to keep interest rates at 0%, expect more and more automation to happen in HFT, it is an inevitable result of this moral hazard.
The fact that the money is being debased quickly, and the so called "economists" - the modern era witch doctors of the kings are promoting this debasement and the fact that the majority of people are buying into this idea, that money needs to be destroyed and stocks are there for gambling and not for investment (not for business participation and not for dividends to be paid), this fact will also provide more space for this further perverse action.
The free money create incentives to gamble, destroy incentives to save, and people (here, on
In order to fix this problem, what should be done is the Federal reserve bank must be prevented from further debasement of currency. The market must be allowed to set the standards on what money is. The interest rates must be set by market pressures, not by government decree. Government must stop issuing debt that it cannot repay and it must liquidate the debt that exists.
Only this will allow the currency to become valuable enough to be saved, it will create competition pressure between sovereign debt and the corporate bonds, this will force the companies to pay an actual INTEREST on the bonds - DIVIDENDS, which will in turn lower the pay that the CEOs and other management gets out of profits and simultaneously this will allow the markets to become investment vehicles again, instead of being giant casinos.
Obviously, this again, will not be a popular or an understood opinion here, but it must be said.