By RACHEL LANE

D.C. Correspondent

WASHINGTON, D.C. — The systems in place for market trading need to be updated, as farming has modernized in recent times, explained J. Christopher Giancarlo, chair of the U.S. Commodity Futures Trading Commission (CFTC), during a hearing before the House Agriculture Committee.

He said regulations in the United States regarding trading are outdated. The system is still geared toward a floor full of traders, which never happens anymore. Along with more flexible regulations, systems and technology are dated.

He said he was on a farm in Texas a year ago where the farmer and his son used GPS guidance for the combine, vehicle telemetry for the tractor and a drone to film the scene to cut the entire field at night.

“Farming, an activity that’s as old as mankind, has always been a daylight activity. Thanks to digitization, is now a 24-hour-a-day activity. That type of digitization in farming is mirrored in our markets, as well,” Giancarlo explained.

Changes to the system and regulations with respect to markets need to be made cautiously, but the country is starting to fall behind. In a recent study, he said the United States was the best country at recruiting talent from college, but ranked the worst in regulations.

Other countries, such as China and Great Britain, have regulatory policies in place, but also have a special designation to allow for innovation. If something is tried and it works, the regulation can be changed to match, Giancarlo said.

The United States needs to keep changing to keep the power over the markets that means most of the markets globally are traded in U.S. dollars and many are controlled here. If market pricing is controlled by another country, the stability U.S. farmers, consumers, homeowners and businesses have will disappear, he said.

Giancarlo said control of the markets is what allows the U.S. to provide a 30-year fixed mortgage for home buyers and a stable price to heat homes. Consumers don’t have to worry if it was a good season for grain and if there will be bread in the store, or how much that bread will cost.

“The consistency we enjoy in our Western way of life would dramatically change,” he charged.

Farmers and ranchers who do not hedge in the market still benefit because the prices offered on the crops are based on the market as a whole.

Giancarlo was questioned closely about Bitcoin, a form of digital currency, and cyber security. He said the CFTC records about 10,000 cyber attacks a month on the agency. So far, no one has broken into the database, and he is determined to do everything he can to stop a security breach. At the same time, the agency has started to run practice drills to respond to security breaches if it does happen.

He is also monitoring how private security is collected, why it’s collected and how it is stored. He plans to minimize the collection of private data and encrypting the way it is stored.

He also said he supports the Dodd-Frank Title 7 rule passed by Congress, but thinks implementation of it may need to be reconsidered. Rep. Michael Conaway (R-Ky.), chair of the House Ag Committee, said Title 7 is supposed to reduce risk, but he is concerned with how it has been implemented and the impact that has had on the market.

“I believe the best markets serve people and businesses who need them and not necessarily the regulators who oversee them,” he said.