high frequency trading

"That was a $200 watch!" "$200 is what you paid for it. What its worth is what you can sell it for."

The "price" or the "worth" or the "value" of something involves time, economic conditions, social norms, even one's perception of reality. High speed trading has caught my attention recently.

Why are "high frequency traders" given special access to order information? I thought these traders competed on speed alone.

From the New York Times, May 2010:

The answer — that it all started with an apparent error — infuriated Mr. Clancy. “The market was never down one thousand points,” he said. “Procter & Gamble should never have traded at $39. But a lot of people lost money as if the prices were meant to drop.”

For a short while, traders started to distrust what they were seeing.

“There was no pricing mechanism,” Mr. Clancy said. “There was nothing. No one knew what anything was worth. You didn’t know where to buy a stock or sell a stock.”

That sounds like an engineered, intentional process, or a subplot in a work of computer science fiction.