What Is the Role of a Matching Engine in a Centralized Exchange?
The matching engine is the core technological component of a Centralized Exchange (CEX). Its role is to efficiently and fairly match incoming buy and sell orders from the order book.
It operates under a specific set of rules, usually price-time priority, to determine which orders should be executed against each other. By rapidly and privately executing these matches, the matching engine prevents external market manipulation, including front-running, by keeping the order flow confidential until execution.
Glossar
Centralized Exchange
Intermediary ⎊ This refers to a regulated or semi-regulated entity that acts as a trusted third party, facilitating the custody of client assets and the matching of buy and sell orders for cryptocurrency and associated derivatives on a centralized order book.
Matching Engine
Architecture ⎊ The core of a cryptocurrency derivatives matching engine lies in its deterministic order processing, designed to ensure fairness and transparency within a decentralized ecosystem.