Banking giant HSBC is touting the results of an experiment in quantum computing–based algorithmic trading, which produced better predictions in over-the-counter (OTC) bond trading.
The bank said its trial, which examined the ability of quantum-powered computers to optimize bond trading using models that estimate how likely OTC trades are to be filled at a quoted price based on real-time market conditions, validated the technology’s potential.
It found that quantum-powered models, which promise vastly increased computing power by using the laws of quantum mechanics to represent and process information, generated a 34% improvement over traditional algorithms in predicting the success of OTC quotes.
The test, which used IBM’s latest quantum processor, Heron, proved better than conventional processors at uncovering pricing signals in noisy market data.
HSBC said the results represent the first concrete evidence of the value of quantum computing in financial markets.
“This is a ground-breaking world-first in bond trading. It means we now have a tangible example of how today’s quantum computers could solve a real-world business problem at scale and offer a competitive edge, which will only continue to grow as quantum computers advance,” said Philip Intallura, HSBC group head of quantum technologies, in a release.
“We have been relentlessly focused on the near-term application of quantum technology, and given the trial delivered positive results on current quantum computing hardware, 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,” he added.