History of High-Frequency Trading

One is impressed by the steadily decreasing times to execute transactions, and might intuitively think that the price changes associated with each transaction are also decreasing in magnitude, providing a graduated price change at the human level. Unfortunately, that is not the picture that we see … instead we see air pockets and flash crashes that introduce volatility at a low level, a jittery behavior that does not engender confidence in the markets, giving the human trader an unmistakable sensation that there is something going on that is unseen to them (which is certainly true) and obliterating any naive notions of transparency in our markets. Dark pools further compound the opacity of our markets, by removing the equal footing that large traders had with small traders, giving the edge to large traders.

In the end, Reality will settle the never-ending debating of economists, by providing some horrific real-world examples of markets being trashed by algorithmic flaws or hackers that create situations where large chunks of liquidity/assets are disintegrated, 21st century style. There are no effective checks or balances in the current trading system, it is inherently unstable and is thus doomed to a spectacular end.

I wonder if any of the HFT driven networking technologies have had had wider, more ‘productive, applications

Please explain. As far as I can see HFT has no function. It may make money for those that engage but it has no function that is useful for society. The purpose of economics and the stock market is supposedly to make money available to efficiently finance the production of goods or research or some other advantage to the human condition. To be able to sell a stock nanoseconds before someone else and make a tiny profit is a complete perversion of the system and only has value because it is allowed to continue. The most amazing fact in the graphic is that by 2012 70% of equity trades are HFT. How is that of value to the country or the world? Computers and algorithms are supposed to help us achieve an end not to be the end in itself. Of course this practice should be banned or at a minimum taxed until it has no value. Hooray for Italy.

PS you forgot to include the founding of the company that found HFT and made them irrelevant in your timeline – the IEX group. They are trying to make the the world of commodities trading safe for real investors and to get HFT out because it is distorting the market.