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.