Market and legal experts last week urged members of two key federal regulating agencies to work together in strengthening oversight of trading markets and in enforcing rules of trade.

The comments were made on Sept. 3 during the second day of a joint meeting of the Securities and Exchange Commission and Commodity Futures Trading Commission. The legal experts, some of whom were former prosecutors and legal staff members of the two commissions, are now in the private sector. One was a law professor.

There was broad agreement among the experts that both agencies, which have in the past fought over turf, should coordinate on how to approach oversight of the markets and enforcement of regulations in a unified matter, especially in cases where there is an overlap of jurisdiction, such as swaps and other sophisticated hedging tools.

In the current division of labor between the two agencies, the SEC oversees securities—which include shares of companies that can be traded, like stocks and bonds. The CFTC oversees hedging on the future price of commodities such oil, corn and even currencies.

There are situations when some products and trade practices lend themselves to oversight and regulations from both agencies. The problem is the agencies differ in the way to regulate or enforce rules even when they agree on the goal. The differences extend beyond violations to remedy and legal standards, said the experts.

The CFTC is typically viewed as having weaker enforcement rules and authority over the markets and its supervision offers more freedom to exchanges on how to operate. But under the SEC’s less flexible approach, exchanges are required to comply with numerous, prescriptive regulations.

In recent months, the CFTC under new Chairman Gary Gensler has moved to improve its oversight of markets and has been pursuing cases of fraud. The CFTC is now looking into establishing position limits for energy products in an attempt to stamp out excessive speculation and to ensure a thriving competitive environment in the energy markets.

The enforcement discussion today came a day after a report by the SEC’s inspector general criticized the agency for missing red flags on swindler Bernard Madoff going back as far as 1992.

John Coffee, a legal scholar on insider trading and a professor at Columbia Law School, hinted to the Madoff affair in his address to the meeting. In order to avoid another Madoff-type problem, he urged the two agencies to establish “a fraud college” where the two agencies can train their staff on how to detect suspicious market activities and other red flags for fraud and other types of market manipulation.

And because securities litigation are often complex and can be time-consuming, Coffee said, regulators can resort to issuing “cease and desist” orders to stop potential market manipulation.

He supported the imposition of position limits, which the CFTC now wants to extend to energy trading. SEC Chairman Mary Shapiro agreed with both suggestions and said she was already looking to improve staff training on fraud detection.

Gensler acknowledged the differences between the two agencies and said he was in favor of cooperation among regulators, although his agency may have to seek additional authority from Congress to do so.