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.
Glossar
Cross-Market Surveillance
Framework ⎊ Cross-market surveillance, within the context of cryptocurrency derivatives, options trading, and broader financial derivatives, represents a holistic risk management approach extending beyond isolated market monitoring.
Trade Surveillance Systems
Detection ⎊ Trade surveillance systems, within cryptocurrency, options, and derivatives markets, function as automated monitoring frameworks designed to identify anomalous trading patterns indicative of market manipulation, fraud, or regulatory breaches.
Cexs
Platform ⎊ Centralized Exchanges (CEXs) serve as the primary trading platform for a vast majority of cryptocurrency spot, options, and futures contracts.