[mjtokelly]

According to some recent research, HFT appears responsible for lowering spreads by more than an order of magnitude: http://marginalrevolution.com/marginalrevolution/2011/10/mor... That's a definite social good that would go away under proposal #3.

[jarek]

Right, we'd have to get some concrete numbers for the drawbacks of HFT (if any) and then compare with the benefits. What's the societal value of having a $20 spread vs a $230 spread on a million dollar transaction? What is an acceptable trade-off spread value, how do we define it in the first place?