As the equity trading industry gathered at TradeTech in Paris this week to discuss the latest developments in terms of liquidity pools, new trading venues, smart order routing or low latency, it is interesting to note comments made about financial markets by European political and business leaders in recent weeks.

The departing chairman of insurance giant Axa, Claude Bébéar, recently lamented the short-term view of equity investors, while French president Nicolas Sarkozy called for a “moralisation” of the financial system, lambasting “speculators” making profits “in a few hours” at the detriment of entrepreneurs.

Should the trading industry worry about its perception among the general public, whose understanding of its activities is limited at best? With the sub-prime crisis and the SocGen scandal, rarely has the image of the financial services industry been so negative.

Sarkozy said on Thursday he intended to work with British and German counterparts to promote a “European economic model” and talked of working with G8 counterparts to impose new “rules.” A few months ago, German chancellor Angela Merkel sought Sarkozy’s support to regulate hedge funds.

A backlash against modern forms of trading could indeed potentially be a regulatory one, from increased taxes on short-term holdings to restrictions on the creation of new derivatives, to name just a few possibilities.

It might be a good idea, therefore, for the industry to address this negative perception and explain the beneficial aspects of what it does, notably in the financing of what critics call the “real” economy.

More thoughts on the subject in the May issue of Banking Technology…

Filed under: Credit Crunch, Securities & Capital Markets, regulation