My memory isn't what it used to be, but I *think* that the current laws on e-trading address "programmed trades--where the computer is told, Buy X shares if the price hits Y. That law was put into place because computers react so much faster than humans.The way I understand it, "Front-running" is illegal; that's exactly what is being exposed here, just that it's being done in a different way (electronically). Still the same act, same results. Has the Fed done anything illegal? If so, they should pay the price (or someone should). Supposedly this "e-front-running" is not specifically illegal (don't know why not), so they have to come up with other methods to prevent it until laws can be passed making it illegal.
What is going on now is legal--humans are still making the trades, but if everyone is making the trades at the same time, the guy with the fastest connection has a distinct advantage.