Digital SAT Reading and Writing Practice Question #462

Text 1 Proponents of high-frequency algorithmic trading (HFT) argue that its implementation has effectively democratized modern financial markets. By executing millions of trades per second, these algorithms provide immense liquidity, thereby narrowing the bid-ask spread—the difference between the price a buyer is willing to pay and the price a seller is willing to accept. Consequently, retail investors executing standard trades face significantly lower transaction costs today than they did in the era of manual market-making. Text 2 While it is undeniable that nominal bid-ask spreads have compressed over the last two decades, celebrating algorithmic trading as a triumph for the retail investor ignores the structural realities of the market. Institutional algorithms are designed not merely to provide liquidity, but to detect and front-run the slower trade orders of retail investors. This predatory arbitrage extracts fractions of a cent from millions of trades, effectively imposing a hidden, systemic tax that dwarfs any superficial savings achieved through narrowed spreads. Based on the texts, how would the author of Text 2 most likely respond to the primary argument of Text 1?