Part of the burden of the global expansion of mutual funds lies in the hands of the offshore industry, a top US regulator said yesterday.

Mr. Carter Beese, commissioner at the Securities and Exchange Commission, was speaking at the Globalisation of Mututal Funds seminar at Marriott's Castle Harbour Resort.

In the keynote speech, Mr. Beese said many in the market are looking to Congress and the SEC to pave the way for further worldwide expansion.

"But there is no such thing as a free lunch,'' he told delegates. "True free trade for the mutual fund industry -- where domestic and foreign funds can compete on a somewhat level playing field at home or abroad -- can only be achieved in an environment of regulatory co-operation.

"This need for some sort of quid pro quo has effectively left part of the burden of the global expansion of mutual funds in the hands of the offshore industry.

"For an industry born out of regulatory wedlock, a bastard child of complex tax codes and restrictive securities laws, the growth of the offshore funds has been quite impressive.

"With the recent developments in the European Community marketplace, offshore funds are not only located in Bermuda, the Netherland Antilles and Luxembourg, but are also now rapidly proliferating in places such as Dublin and Brussels.'' But domestic funds dwarfed those offshore in most countries, and rapid globalisation would only be realised when barriers preventing international competition were eliminated.

"While the regulatory climate in the US is now more conducive to foreign investment advisers, the fact remains that seeking legislation to amend section 7(d) of the Investment Company Act is still a necessary step if foreign funds are to have broad access to American markets.

"Practically speaking, obtaining Congressional approval for any legislation will depend ultimately on the willingness of foreign regulators to open up their markets.''