A new report by the Government Accountability Office (GAO) recommends that the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) set clearer goals for how to harmonize their various approaches to market regulation–including regulating derivatives.

After holding a series of joint public hearings to get feedback on how to harmonize their rules, the CFTC and SEC issued a joint report focused on eight potential areas for harmonization; the joint report also recommended creating a Joint Advisory Committee, the GAO notes, “to be tasked with considering and developing solutions to issues of common interest in the futures and securities markets.” And it is through this Joint Advisory Committee that the agencies plan to coordinate future harmonization efforts. However, the GAO report notes that the SEC and CFTC “have not yet developed clear goals for harmonization or developed requirements for the agencies to evaluate and report their progress toward meeting such goals.”

GAO’s report states that according to agency staff, since issuing the joint report in October 2009, “the agencies have been focused on working with Congress on drafting legislation to address recommended statutory changes. Congress authorized CFTC and SEC to fund the Joint Advisory Committee, as requested in the joint report, and proposed legislation includes provisions that would partially address recommended statutory changes in areas including oversight of exchange rules and enforcement.” CFTC and SEC, GAO continues, “have drafted a charter for the Joint Advisory Committee and expect to have this committee functioning by early summer 2010. Agency staff said the agencies have not set firm timelines for the implementation of the other recommendations for agency action.”

On Wednesday, April 28, both CFTC Chairman Gary Gensler and SEC Chairman Mary Schapiro will appear before the Senate Appropriations Committee’s Financial Services and General Government Subcommittee to testify regarding funding and budget justification for fiscal year 2011.