How Can a CEX Prevent a “Wash Trade” from a Large Derivatives Account?
A CEX prevents wash trading from large derivatives accounts through real-time trade surveillance and internal matching engine rules. Wash trading is the simultaneous buying and selling of the same asset to create a misleading impression of market activity.
The CEX's matching engine is programmed with "self-trade prevention" (STP) rules that automatically cancel orders that would match against another order from the same account. Surveillance systems also monitor for large volumes of self-matched trades across related accounts, flagging them for investigation and potential penalty.
