Proper surveillance of cross-border market professionals and regulated firms is critical to the maintenance of the integrity of securities markets. Worthy of particular attention is the growing multi-national nature of investment management services. The internationalization of the securities markets has had a significant impact on the provision of investment management services. Both individual and institutional investors have an increasing demand for investment advisers with expertise in foreign securities markets and these investors increasingly look to local firms to advise them with respect to investing in those markets. As a result, many such investment management firms have developed relationships with clients resident in several countries.

In the United States, for example, there are currently 284 investment advisers registered with the U.S. Securities and Exchange Commission (the "Commission") that are located outside of the United States, including approximately 53 located in the jurisdictions of other COSRA members. In addition, there are currently 19 investment companies registered with the Commission that primarily invest their assets in other COSRA member countries. These investment companies have approximately $2.2 billion in total assets. As is the case in the United States, these investment companies are important sources of capital for the markets in which they invest.

As the desire and capacity for providing cross-border services has increased, so has the desire to ensure that investment management firms are acting properly in performing their duties. While investor interest in specialized advisory services and foreign markets is at an all time high, the continued interest in and demand for these services will depend largely on the continued integrity of the industry. By sharing information and assisting each other with oversight responsibilities, COSRA members can work to ensure that multinational firms maintain high ethical standards that generate and support investor confidence in each COSRA member market. Continued investor confidence, in turn, will help to ensure that member countries can continue to attract foreign investors to their markets and services.

The proliferation of investment management firms that provide cross-border services has increased significantly the need for cooperation among regulatory authorities, as it is nearly impossible for a single regulator to supervise adequately a firm that conducts business in more than one country. Multinational operations and activities necessarily invoke the jurisdiction of multiple regulators who may not always have complete information about or access to a firm's operations in other countries. Incomplete authority over regulated firms and the difficulties posed by cross-border supervision can create an environment where unethical activities can occur without detection. COSRA members can address these concerns by sharing information and assisting each other with supervisory functions.

Further, providing mutual assistance in the supervision of investment management firms is a vital element in ensuring that COSRA's goals are met. It would be nearly impossible without coordination among COSRA members, for example, to ensure that investment companies and investment advisers that conduct business across borders do so in an ethical manner.

In addition, assisting each other with oversight responsibilities would foster the integrity of the markets for investment management services, and thereby maintain investor confidence in those markets. Maintaining market integrity in this fashion should serve to stimulate investment in COSRA member countries. Furthermore, developing a framework for supervisory cooperation also could lead to opening a dialogue among member nations for mutual recognition of investment management regulatory systems, thus removing barriers that may impede cross-border investment and market development. Mutual assistance and cooperation also would serve to solidify linkages among the markets for investment management services, which could improve liquidity and enhance access to the markets in member countries.

All procedures developed would be consistent with each country's laws governing the activity of the regulatory authority. This framework would enable COSRA members to provide and receive assistance in monitoring the conduct of Multinational investment management firms and persons associated with those firms consistent with each member's laws and applicable regulations.

1. INFORMATION SHARING

Each member country shall, consistent with its laws, cooperate in sharing and providing information in its possession regarding investment management firms operating in the securities markets.

Each member shall cooperate with other members in sharing information in its possession with respect to its investment management market. Such cooperation shall include providing information upon request with respect to a member's regulatory structure and market characteristics. Such cooperation also shall include providing information about investment management firms that are or may be subject to the jurisdiction of more than one member. Members shall also provide information about entities related to the investment management industry, including administrators, custodians, and stock exchanges. In carrying out this principle, members may consider the need for developing procedures for sharing and exchanging this information.

2. ACCESS TO REGULATED FIRMS

Each member, consistent with its laws, shall assist any other member upon reasonable request in obtaining information from or access to investment management firms that are subject to both members' jurisdiction.

Within their legal powers, members shall assist each other in obtaining information from investment management firms that are or may be subject to the jurisdiction of more than one member. Each member, and in particular the regulatory authority of the investment management firm's home country, shall assist other members who share jurisdiction in obtaining access to the records and personnel of the investment management firm. Each member, consistent with its laws, shall assist other members in obtaining access to the premises and personnel of investment management firms and related entities, including administrators, custodians and stock exchanges.

3. JOINT SUPERVISION

Consistent with the laws and regulations governing the activities of the regulatory authority, members shall work together in conducting joint supervisory activities with respect to investment management firms subject to their jurisdiction.

To the extent consistent with their laws and regulations, members shall work together on supervisory activities involving investment management firms that are or may be subject to the jurisdiction of more than one member. Such supervisory activities shall include joint efforts to obtain and analyze information from an investment management firm, and joint inspections of investment management firms.