1. Of course it's arbitrary. And the current time resolution (a computer tick = one ten-millionth?) is just as arbitrary.
2. The market is a man-made system, it's made by and for humans. It would make sense that the time resolution of events is mapped to human perception: You need subsecond liquidity because traders want to perceive their orders as being immediate. But as soon as the order looks immediate, you don't need further precision. The additional resolution is useless to anyone making decisions and only encourages a stupid race that requires immense investments.
3. Can you explain what you think is the value in submillisecond trading?
> Of course it's arbitrary. And the current time resolution (a computer tick = one ten-millionth?) is just as arbitrary.
So why should we change it?
> The market is a man-made system, it's made by and for humans. It would make sense that the time resolution of events is mapped to human perception: You need subsecond liquidity because traders want to perceive their orders as being immediate. But as soon as the order looks immediate, you don't need further precision. The additional resolution is useless to anyone making decisions and only encourages a stupid race that requires immense investments.
I don't follow - by that logic, everything created by humans shouldn't have resolution greater than what we can perceive. Does this hold for, say, HTTP requests, or pings?
> Can you explain what you think is the value in submillisecond trading?
It allows me to complete trades before the market turns against me. In the absence of any particular harm, faster execution is better.
Why do you think the direct participants in the market are primarily humans? There are many automated, non-HFT strategies participating in the market which want, and benefit, from having a time resolution much smaller than what humans can perceive.
Also, to your third point -- as a market maker, more information is strictly better than less information (as a corollary, shorter time resolution is better than longer time resolution). Any time I have less information, my predictions are worse, my risk goes up, and I have to either quote less or wider, making liquidity worse and hurting other (non-HFT) participants.
