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WASHINGTON -- The Commodity Futures Trading Commission is trying to answer a seemingly simple question: What is a U.S. futures exchange and what is a foreign one? The difference was obvious in the days when these financial contracts were traded exclusively by human beings standing in trading pits in New York, Chicago or London.

Not anymore. The rise of all-electronic exchanges that do business all over the world without trading floors has made differentiating between a domestic and foreign futures operation much more complex. Futures contracts convey the obligation to buy or sell an underlying asset, like a bond or commodity, at a set price in the future.

Last week the CFTC, the U.S. futures industry's main regulator, held a hearing, inviting a dozen exchange chiefs, foreign regulators and financial scholars to sit around a table to help figure it out. "Determining where an exchange is located is difficult, if not impossible," said CFTC Commissioner Walter Lukken in his opening remarks.

After several hours of talking, the task still looked impossibly difficult: The CFTC called the hearing to air competing views, and it got as many as time would allow.

Regulatory turf figures prominently in the debate: Financial markets are increasingly global, while regulatory regimes are almost always national. The planned merger of two stock-market operators, NYSE Group Inc. and Paris-based Euronext NV is adding urgency to the larger question of how to regulate global markets. Euronext also has a significant derivatives business in London.

The CFTC has a track record of regulating with a light touch and collaborating with foreign counterparts. These days, it is under pressure to be more hands-on, to define more clearly its jurisdiction and to assert its powers, especially in the area of energy trading.

Some of that pressure is coming from a handful of members of Congress who are pushing legislation that would expand CFTC oversight -- the ultimate goal being to curb speculation in energy trading to bring down oil and gasoline prices. The Senate bill would expand CFTC oversight into parts of the unregulated energy-trading markets. In an interview, Sen. Carl Levin (D., Mich.), a co-sponsor, said the CFTC had "abdicated" its responsibility to oversee trading in crude-oil and other energy contracts.

Industry heavyweight New York Mercantile Exchange also is pushing the CFTC to harmonize the rules that govern it and one rival in particular. Nymex complains that a futures-trading unit of a rival, IntercontinentalExchange Inc., gets to operate under the somewhat looser regulations of the United Kingdom's Financial Services Authority.

The unit, ICE Futures, has captured about 30% of the trading in West Texas Intermediate crude-oil futures since it launched a contract to rival that of Nymex in February. ICE says it is taking share away from Nymex because that exchange still does most of its business via "open outcry" trading pits.

Since the late 1990s, the CFTC has dealt with foreign forays into the U.S. market on a case-by-case basis. More than a dozen times the regulator has used a "no-action" letter to grant foreign operators permission to place their trading terminals in the U.S. while keeping their home-country regulator. Essentially, the CFTC outsources oversight to a foreign regulator.

The International Petroleum Exchange received such a no-action letter from the CFTC in 1999. That London-based exchange was later acquired by Atlanta-based ICE and became ICE Futures -- which explains how an all-electronic exchange whose main computer servers are based in Georgia falls under the oversight of Britain's FSA.

The back-and-forth on other points raised at the hearing showed that the global interests involved in the future of the futures industry only agree on one thing: They want flexibility from the CFTC.

When CFTC Chairman Reuben Jeffery suggested that measuring an exchange's "U.S. trading volume" -- that is, whether it does a critical mass of its business in the U.S. -- might be the best way to determine whether it should fall under the CFTC, other regulators, academics and industry executives unanimously shot down the idea. Volume can go up and down, said one European regulator. Multiple countries could claim they have significant volume, another panelist chimed in.

Even Nymex Chief Executive James Newsome -- a former CFTC chairman -- said he didn't want the CFTC to impose its rules on rival ICE. Instead, he suggested the agency "level the playing field" by letting Nymex operate under the same rules as ICE Futures. British regulations, unlike those in the U.S., don't impose limits on the number of contracts that a trader can control, and don't require the stringent record-keeping and reporting on large trades that the CFTC imposes on Nymex.

To underscore the limits of U.S. regulators' reach, Mr. Newsome suggested that Nymex might try to move its own fledgling electronic-trading operations to fall under U.K. regulations.

But Sir Robert Reid, chairman of ICE Futures, wasn't buying the idea that ICE was winning business because of different rules. At the hearing, he quipped that when a competitor loses, it's only natural to blame the referee.