Big ·quantum computingHSBC claims a quantum computing breakthrough in bond trading: ‘we are on the cusp of a new frontier’By Beatrice NolanBy Beatrice Nolan ReporterBeatrice Nolan ReporterBeatrice Nolan is a reporter on Fortune’s AI team, covering artificial intelligence and emerging nologies and their impact on work, industry, and culture.
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Getty ImagesHSBC has claimed a major breakthrough in applying quantum computing to financial .
On Thursday, the bank said that experimental trials with IBM had dered a 34% imvement in predicting bond trading outcomes.
The trial is being touted as the first piece of empirical evidence that quantum hardware can der real-world value on the trading floor.
Quantum computing’s potential remains mostly theoretical, with many breakthroughs demonstrated under controlled conditions rather than in real-world trading.
So far, these have largely been ofs of concept, showing mise without widespread practical application.
Quantum chips take advantage of subatomic, quantum-level “uncertainty” that allows them to cess multiple tasks in parallel. Traditional analog chips cess tasks sequentially, and are thus far slower.
Quantum computing can solve blems in minutes; analog chips would take hours, days or years to cess the same calculations.
HSBC and IBM’s results were also derived from historical data rather than trades, but the study does indicate that quantum computing could be useful for real-life .
The trial was in collaboration with IBM and its Heron chip—the company’s and highest-performing quantum cessor.
It analyzed more than 1 million quote requests across 5,000 corporate bonds between September 2023 and October 2024.
The bank said the quantum-enabled model significantly outperformed standard classical niques in estimating how ly a customer order would be filled at a quoted price.
In over-the-counter bond , where assets are traded directly between counterparties rather than on centralized exchanges, even small gains in predictive accuracy can offer a competitive edge.
IBM’s stock jumped 5% on Thursday ing the announcement.
“We have been relentlessly focused on the near-term application of quantum nology, and given the trial dered 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,” Philip Intallura, HSBC Group Head of Quantum nologies, said.
“This is a ground- world-first in bond trading.
It means we now have a tangible example of how today’s quantum computers could solve a real-world blem at scale and offer a competitive edge, which will only continue to grow as quantum computers advance,” he added.
Intallura predicted it would create a “flurry of activity” as rivals ramp up efforts to integrate the nology.
Miklos Dietz, senior partner and managing partner of McKinsey’s Vancouver office, told Bloomberg: “If one bank is able to start using quantum computing to develop a gram, then the others will be it the next day and people will not sleep until they have it.” “This exciting exploration shows what becomes possible when deep domain expertise is integrated with cutting-edge algorithm re, and the strengths of classical apaches are combined with the rich computational space offered by quantum computers,” Jay Gambetta, Vice President, IBM Quantum, said in a statement.
Quantum computing in the finance industry Quantum computing has the potential to transform multiple industries, ranging from pharmaceuticals to weather forecasting, by solving complex blems that classical computers cannot efficiently handle.
Big companies, including Google, Microsoft, and IBM, have all announced various quantum computing breakthroughs in the last year, and excitement around the emerging nology has increased.
For most es, the main interest lies in whether quantum computing can speed up cesses or give them a competitive edge, rather than tackling blems impossible for classical computers.
For example, banks do a daily risk calculation called Value at Risk (VaR).
Traditionally, it took all night to run on classical computers, but some early quantum trials suggest the same calculation might be done in minutes.
However, quantum computers also pose a significant risk to encryption systems, relied on by financial institutions such as HSBC, as they could eventually break the codes that tect things online payments and customer data.
Quantum computers could eventually crack widely used encryption methods RSA and ECC, putting online payments and sensitive customer data at risk.
To get ahead of some of these threats banks and firms are post-quantum cryptography, which are new algorithms built to withstand attacks from quantum machines. Fortune Global Forum returns Oct.
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