[akjj]

While algorithmic trading may provide liquidity, it tends to exit markets during crashes and abnormal events. Moreover, I suspect that high-frequency trading's real advantage is not in providing lower spreads, but in much faster reaction time. I would eagerly agree to slightly higher spreads and slower times for trades if it meant less volatility and fewer crashes.

[gaika]

Those traders who didn't exit during the flash crash profited the most, what makes you think they will pull out the next time? On the flip side: those Market Makers that were forced to trade Facebook on the day of the IPO lost the most, when the system was totally broken, what makes you think they will handle the next problem better?

Anybody who's making a profit is almost by definition making the markets more efficient and less volatile. They buy when the price is low (pushing it up) and sell when it is high (pushing down).