What Surveillance Tools Are Used by CEXs to Detect Internal Front-Running?
CEXs use sophisticated trade surveillance systems that employ algorithms and machine learning to monitor trading patterns in real-time. These tools look for suspicious correlations between employee trades and large client orders, sudden changes in trading volume or price, and anomalous execution sequences.
They also monitor communication records and access logs to ensure that employees with access to the private order book are not trading the same assets just before a market-moving event.
Glossar
Cexs
Platform ⎊ Centralized Exchanges (CEXs) serve as the primary trading platform for a vast majority of cryptocurrency spot, options, and futures contracts.
Trade Surveillance
Detection ⎊ Within cryptocurrency, options, and derivatives trading, detection represents the core function of trade surveillance, moving beyond simple rule-based systems to incorporate machine learning models capable of identifying anomalous trading patterns indicative of market abuse.
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.