News and resources on capital markets, exchanges, trade execution and post-trade settlement.
Goldman Sachs makes quantum breakthrough

Goldman Sachs makes quantum breakthrough

Goldman Sachs is claiming a quantum computing breakthrough, designing algorithms it says could be used on hardware that may be available in as little as five years.

The bank has been working with Silicon Valley startup QC Ware for the past couple of years to investigate the use of quantum algorithms in finance, exploring how the technology will eventually outperform classical computers for finance applications.

Researchers at the two firms have been looking at how quantum computing can be tapped for the Monte Carlo algorithm used to evaluate risk and simulate prices for a variety of financial instruments.

Using traditional hardware, the complex calculations needed for Monte Carlo are typically executed once overnight, which means that in volatile markets, traders are forced to use outdated results.

Researchers have long known that quantum algorithms can perform Monte Carlo simulations 1000x faster than classical methods but that this would require error-corrected quantum hardware projected not to be available for 10 to 20 years.

Now, the Goldman and QC Ware team say they have made a "significant step," that could see the simulations carried out on near-term quantum hardware expected to be available in just five to 10 years. To do this, the researchers sacrificed some of the speed up from 1000x to 100x to produce shallow Monte Carlo algorithms.

William Zeng, head, quantum research, Goldman Sachs, says: “Quantum computing could have a significant impact on financial services, and our new work with QC Ware brings that future closer."

Read the research paper

Comments: (1)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 03 May, 2021, 11:092 likes 2 likes

Having done my graduation project on Monte Carlo modeling and simulation, I totally get how quantum computing could drive 1000x higher speeds. Goldman Sachs was a pioneer in algo trading, which exposed limitations even in the speed of light, and led to laying of new fiber optic cable between New York and Chicago in order to speed up options trades by a few milliseconds. I'm not surprised that the firm has been doing pioneering work on another frontier of technology like quantum computing.

This reinforces my long held view that, when it comes to boosting their own revenues and profits, banks and financial institutions are way ahead of other industries in using technology. It's only when it comes to using technology for improving CX that we can't say the same thing.