> The purpose of the "speed" is to elicit information.
Not quite. HFT uses information that you probably don't have, and acts on that information using software and hardware that you probably don't have[0].
You can obtain that information and that software/hardware - it's just expensive (high barrier to entry)[1].
As explained above, HFT exists because portions of the market are not perfectly competitive in the economic sense[2], but that's always been the case (and arguably was more so before the advent of computerized HFT).
[0] It's not so much that you don't have the information - it's that the latency is too high for most players.
[1] At least some portion of these costs are very real - the cost of maintaining low-latency connections between exchanges, colocating hardware, etc.
The HFT traders are most certainly getting information from the speed. They are submitting flash orders of a low quantity to gauge the demand of a stock, the if a buy order is detected, they buy all of the stock from the other exchanges.
Where does this assertion come from? If you take a look at the market book, then you might see that yes, most market-makers (liquidity) in the equity markets are high-frequency orders.
Language is such a tricky thing. 'Speed' is the time it takes to act on information, hence the 'high frequency' in the name to distinguish it from 'regular frequency' but it isn't the purpose. The fact that these traders exist, and their only motivation is to buy or sell at a marginal gain, means that there are always buyers and sellers for a given commodity in the presence of an HFT firm, they do provide the 'other side' of the buy/sell transaction and thus by definition provide liquidity to the assets being traded.
I read a copy of the Mentat prayer that had been written for traders somewhere but have lost track of it, that was something like 'by liquidity I give my transactions life, by speed I give them value, by value I make me wealthy' or something along those lines. It was much more clever than I could come up with, but modest google fu has not revealed its location.
