"Co-operation" in the context of this Paper refers to the ability of regulatory authorities to exchange relevant information about CIS and operators of CIS, which may enhance the ability of funds to market units in foreign jurisdictions, and the ability of fund managers to advise CIS in jurisdictions outside their home jurisdiction, where consistent with applicable law.
International co-operation has become increasingly important for regulatory authorities as cross-border fund sales and the range of products offered by fund managers are growing and have become a significant feature of the investment fund industry. It is also recognised that over the past two decades or so, investors have become increasingly interested in global investing and there has been a considerable growth world wide in CIS as a preferred investment medium.
The ability of fund managers to market CIS cross-borders, and the ability of regulatory authorities to obtain information on these CIS, may be linked to some extent, in that in certain jurisdictions, the more access to information that a regulatory authority has in relation to foreign CIS, the more likely it will permit that foreign fund access to its market. This in turn may facilitate cross-border fund sales. However, in some jurisdictions, including the US, the ability of a foreign CIS to market its units is limited by statute, and does not necessarily depend on the amount of information about the CIS that is available to the foreign regulatory authority.
The enhancement of regulatory co-operation therefore has a dual purpose in facilitating cross-border activity in the marketing of collective investment schemes globally and in increasing confidence in the effectiveness of regulation.
To date, a uniform and consistent approach to the global regulation of CIS has not been pursued by regulatory authorities. It is therefore important in this climate for regulators to develop strategies to deal with this increased global activity in order to improve their collective oversight of the markets. If regulatory authorities chose to ignore the current trend that cross-border activity is increasing, they run the risk of failing to effectively regulate their markets and decreasing investor protection. Alternatively, if regulators accept that globalisation is a permanent feature of the managed funds industry, they should consider ways of improving their oversight of the markets. The incentive for pursuing this approach is that a co-ordinated harmonised approach to international regulatory co-operation should promote and strengthen the securities markets globally, increase investor confidence, attract investment, as well as assist the mutual flow of business.
