Frontrunning

Michael Lewis is all over the place--60 Minutes and  Jon Stewart--with a story that's long overdue. It's been obvious that "High Frequency Trading" is a euphemism for front-running.  Front-running generally occurs when a brokerage firm places an order for its own account in front of a large customer order, harvesting the uptick or downtick of the order before anyone else can, and increasing the cost of filling the customer order.   This is insider trading, and illegal.

In the case of HFT, trading firms obtain the order information after it's been placed, but before it's executed, front-running literally by having a shorter length of optical fiber connecting them to the exchange doing the execution than the customer's.

This is what economists would call a dead-weight loss.