HSBC announced on Thursday it has made a major breakthrough by using quantum computing to improve bond trading predictions.
In partnership with IBM, the bank combined traditional computing with IBM’s Heron quantum processor to boost bond price prediction accuracy by 34%, CBS News reported.
This trial marks the first time quantum technology has shown clear, practical benefits in financial services.
Philip Intallura, HSBC’s group head of quantum technologies, called the achievement a “ground-breaking world-first.”
He explained that better trade predictions mean “increased margins and greater liquidity” for the bank.
The experiment focused on over-the-counter markets, where bonds and other financial assets are traded directly between parties, without a central exchange.
Using IBM’s latest quantum computers, HSBC was able to estimate the chance a trade would be completed at a certain price much more accurately than with classical computers alone.
“This is something that we do thousands of times a day already and that’s estimating the likelihood of winning a trade,” said Josh Freeland, HSBC’s global head of algorithmic credit trading.
IBM’s Heron Processor Boosts HSBC’s Bond Pricing with Quantum Power
Quantum computing uses the principles of quantum mechanics to process information in new ways, solving problems far beyond the reach of today’s fastest classical supercomputers.
Big tech companies like IBM, Google, and Microsoft are racing to develop this technology, which could revolutionize many fields including finance, logistics, and cybersecurity.
According to Financial IT, in HSBC’s trial, IBM’s Heron processor helped classical computing methods better uncover hidden pricing signals from noisy market data.
This led to strong improvements in how bonds are priced and traded. HSBC called the results “the first empirical evidence” that quantum computers can solve real-world algorithmic bond trading challenges.
Intallura expressed confidence in the future of quantum computing in finance: “We have great confidence we are on the cusp of a new frontier of computing in financial services, rather than something that is far away in the future.”
Jay Gambetta, IBM’s Vice President of Quantum, added that combining classical and quantum computing opens new doors for algorithm development and industry transformation.
Originally published on vcpost.com
