It's worth nothing that eating into Renaissance's profits in this way is good for everyone else because it means that accurate prices are reaching the market faster.
If a firm is able to consistently get to all the other exchanges first, they can shave pennies off of a large percent of orders. That's a pretty big downside for everyone that trades.
They get accurate prices to the market faster, but only by a millisecond or so. That's a miniscule upside.
If market makers (i.e. most HTF firms) weren't able react to large market moving trades very quickly, they would have to keep spreads wider to manage the risk of adverse selection. This increases the cost for everybody for the benefit of a few large investors.
You could say the same thing about insider trading. So, the argument that accurate prices reach the market faster is not, in and of itself, an argument that something is good.
I am on the fence myself, not having thought about the matter too much. Instinctively, I'd say insider trading should be handled as a breach of contract (ie if I trade on something that I signed an NDA for), not as a criminal matter.
