An expected and uneducated statement. It's simple really: any participant who rests an order on the book is adding liquidity. Period. Many HFT strategies are largely passive (market making, for example) and therefore entirely rely on resting orders (as Chris' article points out). Therefore, they add liquidity.
Now, if you want to get into a discussion as to the quality of that liquidity then you have to go educate yourself a bit more. Once you do you'll find that the liquidity being added is not toxic nor fleeting. However, what you and most others don't understand is that it is also significantly more informed passive liquidity than it used to be.
This may lead folks to believe that the liquidity is fleeting because they can cancel away before you can execute. However, that simply means they are better and faster than you, not that they are doing anything wrong.
Why, then, don't we simply require them to rest their orders for a longer period of time? Simple: you want tight spreads. As spreads shrink market making becomes less profitable. When market making is less profitable market makers have to be more risk averse to avoid getting adversely selected and losing money. More intelligent models (they become more informed) and less latency (they can leverage that informedness to avoid being selected) is how market makers stay profitable in a market where the average spread is 1 penny.
Now, if you want to get into a discussion as to the quality of that liquidity then you have to go educate yourself a bit more. Once you do you'll find that the liquidity being added is not toxic nor fleeting. However, what you and most others don't understand is that it is also significantly more informed passive liquidity than it used to be.
This may lead folks to believe that the liquidity is fleeting because they can cancel away before you can execute. However, that simply means they are better and faster than you, not that they are doing anything wrong.
Why, then, don't we simply require them to rest their orders for a longer period of time? Simple: you want tight spreads. As spreads shrink market making becomes less profitable. When market making is less profitable market makers have to be more risk averse to avoid getting adversely selected and losing money. More intelligent models (they become more informed) and less latency (they can leverage that informedness to avoid being selected) is how market makers stay profitable in a market where the average spread is 1 penny.