How Do CEXs Ensure Fair Transaction Execution without Mempool Transparency?
CEXs operate a private, centralized order book where all pending orders are internal and not publicly visible until executed. They use sophisticated, proprietary order matching algorithms that execute trades based on strict price-time priority rules.
The exchange acts as a trusted intermediary, legally bound by their terms of service and regulatory rules to prevent their employees or systems from front-running client orders. Internal surveillance systems constantly monitor for abusive trading patterns.
Glossar
Internal Surveillance Systems
Framework ⎊ Within cryptocurrency, options trading, and financial derivatives, a robust internal surveillance system functions as a layered framework designed to proactively identify, assess, and mitigate operational and regulatory risks.
Fair Transaction Execution
Integrity ⎊ Fair Transaction Execution within cryptocurrency, options, and derivatives markets necessitates a robust framework ensuring price discovery reflects genuine supply and demand, minimizing manipulative practices.
Cexs
Platform ⎊ Centralized Exchanges (CEXs) serve as the primary trading platform for a vast majority of cryptocurrency spot, options, and futures contracts.
Order Matching Algorithms
Execution ⎊ Order matching algorithms within cryptocurrency, options trading, and financial derivatives represent the core computational logic determining trade prioritization and completion, fundamentally impacting market efficiency and price discovery.