What Internal Surveillance Tools Do CEXs Use to Detect Market Manipulation like Front-Running?
CEXs employ sophisticated Trade Surveillance Systems (TSS) that monitor real-time trading data for suspicious patterns. These tools use algorithms to analyze order and trade flow, looking for rapid, consecutive trades by the same entity that profit from a price change caused by a third party's order.
They also monitor for wash trading, spoofing, and layering. Upon detection, the CEX compliance team can investigate the accounts, issue warnings, or delist the accounts to enforce market integrity rules.
