I think it's vilified because for some reason people think that the HFTraders are "stealing" from them in the form of tax avoidance and their exorbitant incomes.
Even more than that. Going by their 2015 reports, KCG made $885M in revenue, and Virtu made $757M. JPMorgan made $93,543M. If you look at net income, it's even more dramatic since HFT firms generally run on tighter margins.
I've never quite understood the amount of HFT hate here. God's work it ain't, but it's a bunch of nerds using bleeding-edge technology and machine learning to break into and (dare I say) disrupt an industry whose avarice and sense of entitlement is perhaps unparalleled in modern history. It's tailor-made for this crowd, but somehow still gets a bad rap. I truly fail to see how that's less exciting than anything else anyone here gets worked up about.
I'm not generally a fan of viewing the world in terms of an extended version of the social struggle from high school, but given that this actually does do a reasonably accurate caricature of human market makers versus HFT firms, this has always confused me regarding HN's reaction to HFT.
In one corner, we have sweaty alpha male jocks [+]. In the other corner, we have geeks with computers. The geeks ran the table on the jocks primarily because the geeks can do math faster. The jocks complain that the geeks are cheating, because how can they be expected to out-math a computer and, also, isn't math just a little suspicious? And HN sides with the jocks?
[+] People might think I'm exaggerating. Videos exist of the daily life of a market maker. Here's a representative day at the office, circa 2000, in Chicago's open outcry options pit: https://www.youtube.com/watch?v=mvx3xM02iUs In stocks and bonds, you generally got to be sweaty in your own office (open plan, frequently) and yell at someone over the telephone rather than straight to their face.
I thought about your question on my walk home from work today. I decided that as much as jocks vs geeks is a powerful force, a more powerful force is people's distrust of middlemen. People don't really understand that liquidity provisioning is a service that needs to be paid for. They think that if we could just wipe all middlemen off the face of the planet that buyers could just trade with sellers and we'd all save a little bit of money on trading fees.
So it's not so much that HN has sided with the jocks over the geeks. It's that (some portion of) HN dislikes both of them. And since the geeks killed the jocks the geeks are all there is left to dislike.
We're paying entirely too much for liquidity that value investors don't need. If my holding period was less than a day, that's a buyer and seller who would have found each other without my "help", and I didn't contribute any insight about the company's value, just about flaws in the marketplace.
It's not so much distrust of middlemen, as it is distrust of anonymous middlemen. And also automated middlemen. People are happier getting shafted by a person they can see than a bot they can't. Otherwise, they would be hurling abuse at Apu down at the Kwik-e-mart when he charges them 30% extra for a quart of milk just because he bridges time (11pm) and space (down on the corner) to provide liquidity and make it convenient for them.
Part of this is also algorithm aversion (even here on HN) - watch how people are reacting to Tesla autopilot crashes. There is a lot of tin foil stuff about 'algos gone haywire', but I can tell you now that humans fat fingering in the market were both more common and more deadly.
I agree about distrust of middlemen. The analogy that i would go with is that the biggest HFT firms are like big-box retailers. Not glamorous at all (despite the math), and most of the hard work is in automation/process to manage the storefronts and inventory at scale. HFT becomes comparable to walmart, which does not engender much love.
