By Katanga Johnson

WASHINGTON, (Reuters) – The chair of U.S. Securities and Exchange Commission said Wednesday that more enforcement actions may be taken in cases involving derivatives. He stated such products could pose “system-wide risk” when markets are stressed.

Agency brought criminal charges against Bill Hwang and others, who own private funds Archegos and were alleged to have engaged in market manipulation and fraud to increase exposures to select stocks via sophisticated equity swaps.

SEC Chair Gary Gensler, speaking to industry members on Wednesday said that “Market participants use derivatives touch so many aspects of our market,” referring to SEC-registered money wrapping products in publically offered strategies and private funds using derivatives at high exposure levels.

He said that the use of derivatives poses unique and possibly significant risks to investors from all markets sectors, even for sophisticated investors. It can create system-wide problems by operating in unanticipated situations when there is volatility or stress.

“There might be more (enforcement activities) to come.”

British and U.S. regulators of financial services have held discussions with broker-dealers, as they attempt to assess the impact of Archegos’ default.

Gensler’s comments give new life to an ongoing project of SEC to provide stricter oversight for the securities market.

Although the Commodity Futures Trading Commission holds the largest responsibility for monitoring derivatives, the SEC is slow to develop rules that will apply to a small fraction of securities-based derivatives.

Gensler warned, however, that any swaps using cryptocurrencies will generally be reportedable as security-based swaps.

“Without prejudging anyone one token… If a Swap is based on a crypto asset which is a Security, then that makes it a Security-Based Swap. “They are therefore subject to the same rules,” he stated.