ISDA and other trade associations, including the Global Financial Markets Association (GFMA), have responded to the Basel Committee's consultation on revising the leverage ratio. The associations stress that the leverage ratio is meant to be a backstop to capital risk-weighted capital requirements, rather than the other way around. By enlarging the denominator of the leverage ratio, with definitions of the exposure measure that go beyond actual economic exposure, the leverage ratio, rather than risk-based calculations, would actually become the binding capital requirement. Institutions would be encouraged to hold more risky assets, instead of high-quality liquid assets above liquidity coverage ratio requirements. This would have implications for systemic risk and affect the markets for government debt, also impacting on monetary policy. The associations call for a measurement of derivatives exposure based on the non-internal model method and that recognises risk-mitigating effects of cash-collateral and enforceable netting. Client transactions cleared through a central counterparty should be excluded from the exposure measure. (Source: Comments on the Revised Basel 3 Leverage Ratio)