Regulatory bodies supervise all players in the financial markets, including investment firms and brokers. The primary goal of a regulatory body is to make sure customers are subjected to fair financial practices. To achieve this – a set of rules and regulations must be imposed. When a license is issued to a broker, it gives them the right to operate in a certain jurisdiction, as long as they abide by appropriate rules and regulations. If an entity fails to do so – their license may be revoked.
Ensuring that your investment is safe, your trades aren’t meddled with, and no scamming occurs. The greater regulatory authority (which varies depending on a broker’s place of registration) is there to take care of such cases, which means there’s always someone for you to turn to.
Regulation ensures that your investments don’t go in the same box as your broker’s capital. This way, a regulated broker can always attend to your withdrawal request, should you wish to file one.
Risk Warnings that regulated intermediaries are obliged to use, serve as reminders of risk, and aim to prevent you from getting completely blinded by the desire to get rich quick.