HFT has been around in Europe and is as well established as the US, so I assume the alleged scam relates directly to buying and operating Microwave networks. Seriously, please do provide more information, I am keen to learn more.
disclaimer: I've not read 'Flash Boys' yet, so apologies if it's all explained in that book
If you are interested in the topic of HFT, 'Flash Boys' might literally be the worst introduction to the industry you could read. It is rife with bias and technical incorrectness. Worse than that it is disjointed and plain poorly written (and a fair chunk of it appeared in Vanity Fair which is available online).
I have my own problems with 'Dark Pools' by Patterson, it does have some technical inaccuracy, but on the whole it paints a picture that is closer to reality and is still readable.
If what you are looking for is "narrative" non-fiction, Flash Boys and Dark Pools sort of own the corner. Of the two, Dark Pools is much better. In general, it is hard to tell a good narrative around HFT because it is so technical.
Trading & Exchanges by Harris is dated but will give you an introduction into market microstructure, keep in mind it was written before RegNMS.
Reading TCP/IP Illustrated won't teach you how to configure BGP prefix filtering regexes on a Cisco router, but the background sure is helpful. Harris is similarly helpful (and in a bunch of weird ways, similarly constructed and written) for understanding financial technology. I do software security consulting for large financial technology companies, and if you ever want to get one of their developers head's nodding, mention an example from Harris.
It's weird that more nerds on HN haven't read it. It's a great book, and it's great in a very nerdy, systems-y way.
Read the book and you'll learn why it's a scam. Only because something is well established, doesn't mean it's morally legal. Your pension funds (and so is mine) are getting screwed big time by HFT.
No they aren't. One of the largest and hands-down most respected mutual fund companies in the world, Vanguard, the company that inspired the "Bogleheads" movement, publicly stated last year that HFT had helped them, by driving down spreads.
The fact is that credible pension funds don't make their money by competing with sell-side firms. When your only job is sporadically making large block trades, you're happy to see spreads competed down as far as they can go. You don't care which market makers are winning the race to provide the cheapest possible liquidity.
Claims that buy-and-hold funds are victimized by HFT are hard to square with what Vanguard said, and with the logic of how automated trading works.
Your pension fund might be aggressively speculating in daytrading. Mine is not. You might want to look into that for reasons beyond other market participants. You can lose your shirt if you're a short term speculator very quickly, regardless of presence or absence of HFTs.
Long term investment might be a better strategy than wild speculation for a goal like that.
I believe in Flash Boys the issue is not HFT itself but that the way the market provides access favors certain parties. I could be wrong though, I've only seen the (somewhat related)documentary on the subject some time ago.
"IEX's main innovation is a 38-mile coil of optical fiber placed in front of its trading engine, which adds a round-trip delay of 700 microseconds and is believed to limit traders' ability to respond on the dark pool ahead of IEX's own pricing algorithms."
IEX is not an exchange. It is a dark pool with technology, rules and special order types specifically in place to give large hedge funds advantages over "average" investors.
They still allow collocation, venue arbitrage, and non-human timescale trading. Any electronic trade you could do on any other dark pool you can do on IEX.
The main difference between IEX and other dark pools is that they are owned by hedge funds and they either duped or bribed a famous author to write about them.
[edit] The comment below correctly points out my insinuation about bribery and Michael Lewis is unfair and snarky. I will point out that Michael Lewis wrote a glowing book about Jim Clark a decade ago, who happens to be an investor in IEX, so there is at least the potential for intentional bias.
IEX is currently not an exchange. What they offer is a dark pool connected in series with a Smart Order Router. That's what all the big brokers (e.g., JPMorgan, Morgan Stanley, Goldman, Deutsche Bank, etc.) have been offering to their customers for years and their dark pools usually offer a lot more liquidity. The big brokers have become better and better and smart order router technology to protect their customers as much as possible from HFTs. IEX is at least 5 years late to the party.
Perhaps they are planning on becoming an exchange one day, but I am not sure how they can do that while slowing down order executions. It seems to me that that would be a serious violation of Regulation NMS.
HFT has been around in Europe and is as well established as the US, so I assume the alleged scam relates directly to buying and operating Microwave networks. Seriously, please do provide more information, I am keen to learn more.
disclaimer: I've not read 'Flash Boys' yet, so apologies if it's all explained in that book