He ties it in as one of the causes of the sudden mini-crash last month:
Most retail investors cannot game this - that is, this is how you, the retail investor, see orders. When you put in an offer for $50.10 (to sell) you will stand behind the other 20,000 shares, and you will fill if and only if the demand is high enough to exhaust the orders in front of you.
Not so for the HFT folks.
Because there is very little cost to cancel an existing order. They therefore will place tens of orders that they are not sure they want to have execute or not. If the price moves in a way they deem "disadvantageous" suddenly out of those 20,000 shares "in line" at $50.10 three-quarters or more of them will disappear from the line!
You, as a retail investor, cannot possibly react fast enough to do this. But a computer can, and does. In fact, since 2000 the cancel-to-execute ratio has gone from 10:1 to more than 30:1!
The problem with this game is that it sends false signals to the market. When 70% or more of all volume is in fact computers passing shares to one another on a sub-second basis, with holding times being measured in seconds or minutes rather than days, weeks, months or years, you have a market that looks liquid but in fact is not.
You also have a market that severely disadvantages the very people it is supposed to provide a service to: those who wish to invest, and corporations that wish to form capital.
[T]he stock market has turned into a gigantic casino, where the exchanges and HFT players both conspire to try to drive up volume irrespective of the underlying purpose so there is a flow of funds from which to skim.
This has to stop. High-frequency trading has come to be 70% or more of the volume on US markets, and not one bit of it provides a social good. Indeed, it is a social evil, in that the skimming must, by definition, come from those who are participating in the market to either invest or raise capital. It cannot be otherwise, since an exchange is incapable of manufacturing anything of value itself.
In addition, this false liquidity signal - that is, alleged "depth" in the market that does not exist, as for every share of stock that is intended to execute there are thirty that are not - leads people to believe they can buy or sell in volumes that cannot actually be filled. This in turn leads to circumstances like the "Flash Crash" where sellers come in and poof - all the buyers instantly disappear!