Oh yeah. And they have accomplished the trader's ultimate goal and fantasy : to earn truckloads of cash without having to predict the direction of the markets.
I do not at the moment since I mainly trade index and ETF vol these days. A little while ago, however, I was on the sell side and had sizable single name risk, so I did route my deltas to dark pools all the time.
In fairness, while spreads are tighter, the book depth is down and quote volatility is way up. Like everything else in the world, it's hard to say if HFT taking over market-making is a net positive or a negative.
You are quite welcome. Here is another book that should also interest you : Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street Are Destroying Investor Confidence and Your Portfolio, by Sal Arnuk. From the cover: "The markets have evolved at breakneck speed during the past decade, and change has accelerated dramatically since 2007's disastrous regulatory "reforms." An unrelenting focus on technology, hyper-short-term trading, speed, and volume has eclipsed sanity: markets have been hijacked by high-powered interests at the expense of investors and the entire capital-raising process. A small consortium of players is making billions by skimming and scalping unaware investors -- and, in so doing, they've transformed our markets from the world's envy into a barren wasteland of terror."
I'd be interested to see a study on the revenues generated by the former vs the latter to provide an indirect answer to that question that bypasses the whole issue of having to measure and quantify liquidity, which I agree is a tricky issue Although my money's on HFT being a net benefit mostly from first principles reasoning more than anything, market making is a job for a computer (scale/scope economies, repetitive and simple task), not a human, so it's logical that less rent is collected when the service is provided by a machine. Also all the alphas are all commoditized now so margins are very small now (1-2 bps at most), the trend towards automation has sped up the commoditization of alphas (code has zero marginal cost of replication)
Enjoy! This is the stuff that mainstream media and the financial talking heads on TV will never tell us, for obvious reasons.
https://yippy.com/ysa/cgi-bin/query-meta?query=Broken+Markets:+How+High+Frequency+Trading+and+Predatory+Practices+on+Wall+Street+Are+Destroying+Investor+Confidence+and+Your+Portfolio,+by+Sal+Arnuk. +The Review Cluster 80 / 20 for Broken Markets