# How Do the CFTC's Rules on "Disruptive Trading Practices" Apply to Front-Running in Crypto Derivatives? ▴ Learn

**Published:** 2025-11-14
**Categories:** Learn

---

## How Do the CFTC’s Rules on “Disruptive Trading Practices” Apply to Front-Running in Crypto Derivatives?

The CFTC's rules on Disruptive Trading Practices (Regulation 180.1) prohibit manipulative and deceptive devices, including the misuse of non-public information. Front-running, which involves trading ahead of a client's order based on non-public knowledge, falls under this prohibition.

The CFTC can bring enforcement actions against individuals and exchanges that engage in or fail to prevent such practices in the crypto derivatives markets they oversee.

What Is the Risk of “Information Leakage” in a CEX’s Derivatives Clearing Process?

How Do “Fair Access Protocols” Technically Prevent a Crypto Exchange Employee from Front-Running?

How Does Front-Running Relate to Information Leakage in Public Crypto Markets?

What Specific Anti-Market Manipulation Regulations Apply to CEXs That Are Regulated as Broker-Dealers?

## Discover More

- 
### [How Does Front-Running Occur in the Context of Smart Contracts?](https://crypto.greeks.live/learn/how-does-front-running-occur-in-the-context-of-smart-contracts/)
![This close-up features polished metallic hardware surrounding a recessed aperture set within layered substrates of cream and pale cyan composite materials, evoking a sealed system interface. This visual metaphor suggests the robust security underpinning decentralized finance protocols and the layered complexity of on-chain governance mechanisms. The precise metallic fixture, secured by small fasteners, represents the immutable smart contract logic safeguarding digital asset custody, akin to securing collateral in a collateralized debt position or escrow within an over-the-counter derivatives execution. The interplay of materials hints at the physical manifestation required for cold storage key security or hardware security modules protecting private keys essential for managing high-value decentralized autonomous organization treasuries and navigating complex delta hedging strategies inherent in perpetual futures markets. This texture embodies resilient infrastructure required for regulatory compliance in tokenized securities.](https://crypto.greeks.live/wp-content/uploads/2025/10/Macro-View-of-a-Secured-Physical-Layer-Access-Point-Detailing-Exotic-Asset-Tokenization-Infrastructure-Integrity.jpg)

Front-running is when a user with access to pending transactions exploits that information for their own profit.

- 
### [How Do Centralized Crypto Exchanges (CEXs) Technically Mitigate Front-Running?](https://crypto.greeks.live/learn/how-do-centralized-crypto-exchanges-cexs-technically-mitigate-front-running/)
![A dark, monochromatic rendering depicts a polished, bisected spherical containment unit revealing a complex internal structure. Penetrating the core are two opposing, highly detailed, translucent probes exhibiting intricate circuit traces suggestive of ledger technology implementation. This visually abstracts the core-satellite structure of decentralized autonomous organizations DAO governance mechanisms interfacing with high frequency market microstructure. The embedded circuitry implies complex smart contract logic governing settlement protocols across permissionless blockchains. These probes symbolize the directional vector of leveraged portfolio hedging against volatile spot price action via synthetic asset issuance utilizing decentralized finance DeFi primitives like AMM liquidity pools and perpetual swap derivatives settlement layers. Specific terms include on-chain settlement layer risk exposure basis trading algorithmic execution and atomic swaps capability.](https://crypto.greeks.live/wp-content/uploads/2025/10/Cross-Sectional-View-of-Encapsulated-High-Frequency-Algorithmic-Trading-Execution-Vector-Within-A-Synthetic-Asset-Shell.jpg)

CEXs use fair order matching, internal monitoring, and sometimes batched execution or 'speed bumps' to prevent the misuse of order book data.

- 
### [Does the MTM Process Apply to Physically-Settled Futures Contracts?](https://crypto.greeks.live/learn/does-the-mtm-process-apply-to-physically-settled-futures-contracts/)
![Sharp, intersecting planes of clear glass converge near a pyramidal refractive structure, juxtaposed against a monolithic, muted cyan disc, set against absolute blackness. This abstract assembly symbolizes the complex topological mapping inherent in non-linear option payoff structures, specifically illustrating implied volatility surfaces and the dynamics of theta decay across various strike prices in crypto options. The hard angles suggest structural rigidity in smart contract execution while the translucent material hints at transparency in underlying asset movements. Understanding the arbitrage mechanics across perpetual futures and standard contract expiration requires visualizing these multidimensional geometric relationships essential for calculating the Greeks, such as vega exposure relative to underlying asset volatility in high-frequency decentralized exchange environments utilizing synthetic asset wrappers and collateralized debt positions.](https://crypto.greeks.live/wp-content/uploads/2025/10/Crystalline-Geometric-Abstraction-Illustrating-Convexity-Skew-in-Decentralized-Finance-Derivatives-Structures.jpg)

Yes, MTM is a universal risk management process for all futures contracts, regardless of final settlement type.

- 
### [Does Portfolio Margining Apply to Crypto Futures and Options?](https://crypto.greeks.live/learn/does-portfolio-margining-apply-to-crypto-futures-and-options/)
![Chrome banding intersects with smooth, cream-colored structural elements suggesting vehicle paneling set against absolute dark space, reflecting a distinct cyan-blue geometric plane signifying digital ledger entry validation. This composition metaphorically represents the precise demarcation lines inherent in structured decentralized finance mechanisms. The sharp interface between materials mirrors the execution purity required for successful on-chain settlement of tokenized real-world asset derivatives. Analyzing the chromatic gradient implies liquidity depth visualization akin to order book asymmetry or slippage mitigation strategies employed in low-latency decentralized exchange protocols. Understanding this intersection illuminates the physical underpinning required for robust synthetic asset creation and collateral management in cross-chain interoperability contexts involving options structures. The visual tension speaks to delta hedging efficacy against underlying volatility surfaces.](https://crypto.greeks.live/wp-content/uploads/2025/10/Tangible-Manifestation-of-Tokenized-Asset-Allocation-Within-High-Frequency-Trading-Architecture.jpg)

Yes, major centralized crypto exchanges often apply it across combined futures, perpetual swaps, and options positions for risk netting.

- 
### [Does Slippage Tolerance Prevent Front-Running or Just Mitigate Its Financial Impact?](https://crypto.greeks.live/learn/does-slippage-tolerance-prevent-front-running-or-just-mitigate-its-financial-impact/)
![This abstract composition exhibits radiating pleated structures resembling accordion folds in beige and black juxtaposed with sharp angled panes of tinted, slightly textured glass reflecting ambient light against absolute darkness. This visual schema conceptually maps to the non-linear payoff profile of complex financial engineering specifically in decentralized finance DeFi where layered smart contracts dictate settlement mechanics. The central nexus suggests an escrow mechanism or a clearinghouse entity managing margin requirements and collateralized debt positions CDPs underlying perpetual swaps or forward contracts. The angular glass planes represent volatile exposure surfaces possibly indicating delta hedging adjustments or the asymmetric risk associated with deep out-of-the-money OTM options exposure within high-leverage synthetic asset protocols requiring robust liquidity provisioning and automated liquidation engines.](https://crypto.greeks.live/wp-content/uploads/2025/10/Asymmetric-Collateralized-Futures-Contract-Mechanism-Visualized-Through-Pleated-Material-Structures.jpg)

It mitigates the financial impact. A low tolerance causes the victim's transaction to revert if the front-runner's price manipulation is too severe, preventing the front-runner's profit rather than stopping the initial attack attempt.

- 
### [What Is Front-Running in the Context of Decentralized Exchanges?](https://crypto.greeks.live/learn/what-is-front-running-in-the-context-of-decentralized-exchanges/)
![This macro view captures a highly polished, teal-hued spherical element emerging from a stacked, dark, concentric structure suggesting a precise optical or mechanical interface. This visual configuration conceptually models the complex mechanics of decentralized finance DeFi structured products like exotic options where the smooth exterior represents the perception of liquidity while the internal glassy layers denote stochastic volatility modeling. The interplay of light on the lens-like apparatus suggests price discovery mechanisms within an Automated Market Maker AMM pool. Specifically, the structure evokes the nested security layers shielding underlying collateralized assets from sudden liquidation cascades or exposure to catastrophic risk events inherent in high-leverage perpetual swaps. Keywords emphasize the convergence of on-chain security architecture and derivative pricing theory including: Black Scholes Merton adjustments collateralized debt positions CDPs theta decay hedging mechanisms and synthetic asset issuance frameworks.](https://crypto.greeks.live/wp-content/uploads/2025/10/Microscopic-View-of-DeFi-Liquidity-Pool-Front-End-Module-Reflecting-Token-Implied-Volatility-Surface.jpg)

An attacker sees a pending DEX trade, copies it with a higher fee to execute first, and profits from the price impact of the original trade.

- 
### [Can a Private Blockchain Comply with “Right to Be Forgotten” Rules If It Is Immutable?](https://crypto.greeks.live/learn/can-a-private-blockchain-comply-with-right-to-be-forgotten-rules-if-it-is-immutable/)
![This macro visualization reveals a textured, cyan geodesic element secured by metallic mounting brackets against dark, striated structural members suggesting hardened infrastructure or immutable ledger architecture. The rough surface texture on the sphere evokes the concept of entropy or randomized state within verifiable consensus mechanisms, perhaps representing a volatility surface node or a specific derivative payoff profile. The robust fastening system implies rigorous execution and settlement integrity crucial for high-frequency crypto arbitrage strategies. This assembly symbolizes the engineered precision required to manage counterparty risk within decentralized finance derivatives platforms, contrasting organic texture with deterministic structural support typical in advanced quantum-resistant cryptographic primitives or secure oracle integration points for calculating complex spread options.](https://crypto.greeks.live/wp-content/uploads/2025/10/Textured-Cyan-Sphere-Mounting-Hardware-Precision-Engineering-in-Algorithmic-Hedging-Structures.jpg)

Yes, by storing personal identifying information (PII) off-chain and only a non-identifying hash on-chain.

- 
### [Can a DEX Protocol Be Designed to Be Inherently Resistant to Front-Running?](https://crypto.greeks.live/learn/can-a-dex-protocol-be-designed-to-be-inherently-resistant-to-front-running/)
![This macro-view depicts intersecting blue structural elements converging upon a central metallic bearing or roller mechanism suggesting high-precision mechanical settlement analogous to settlement finality in decentralized finance derivatives. The pale beige lower components resemble substrate or structural bracing, possibly symbolizing collateral management frameworks or base layer protocol integrity. The cruciform arrangement suggests orthogonal leverage points or counterbalancing forces intrinsic to option pricing models such as Black Scholes adjustments applied to stochastic volatility surfaces. This visual metaphor illustrates the delicate calibration required for algorithmic market making in decentralized exchanges managing perpetual futures contracts and collateralized debt positions across different liquidity pools necessitating tight slippage control during high-frequency order flow management for achieving delta neutral exposure within DeFi options protocols.](https://crypto.greeks.live/wp-content/uploads/2025/10/Precision-Engineering-of-Crypto-Derivative-Mechanisms-Undergoing-Volatility-Dampening-Mechanisms.jpg)

Yes, by using mechanisms like batch auctions, commit-reveal schemes, or encrypted mempools to hide trade details before execution.

- 
### [What Is the Concept of ‘Delivery Squeeze’ in Commodity Futures and Can It Apply to Crypto?](https://crypto.greeks.live/learn/what-is-the-concept-of-delivery-squeeze-in-commodity-futures-and-can-it-apply-to-crypto/)
![The macro shot reveals complex electromechanical architecture resembling the core spindle of a high-frequency trading mechanism or possibly the internal rotor of a decentralized physical infrastructure network validator node. Highly polished, reflective metallic surfaces juxtaposed with translucent, cyan-tinged composite blades suggest rapid throughput dynamics inherent in zero-latency settlement layers. This composition abstractly models the tension within perpetual futures contracts or the precision required for automated market maker liquidity provisioning. The central bearing exhibits minute debris indicative of wear or stress testing a fundamental component in securing digital asset exposure. Keywords involve synthetic asset creation embedded system failure analysis volatility skew monitoring tokenomics distribution mechanics and settlement finality protocols.](https://crypto.greeks.live/wp-content/uploads/2025/10/Close-Up-Examination-of-Deconstructed-Digital-Asset-Collateralization-Mechanism-Spindle-Assembly.jpg)

A delivery squeeze is when a large buyer forces a price spike by demanding physical delivery that sellers cannot easily procure.

---

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