HSBC is lauding the results of trials with IBM that tested the value of current quantum computers for algorithmic trading in the bond market
Algorithmic trading in the corporate bond market uses computer models to quickly and automatically price customer inquiries in a competitive bidding process.
Working with a team from IBM, HSBC utilised quantum computing resources to deliver up to a 34 percent improvement in predicting how likely a trade would be filled at a quoted price, compared to common classical computing techniques used in the industry.
The trial explored how today’s quantum computers could optimise requests for quote in over-the-counter markets, where financial assets such as bonds are traded between two parties without a centralised exchange or broker. In this case, IBM Heron was able to augment classical computing workflows to better unravel hidden pricing signals in noisy market data.
The teams validated real and production-scale trading data on multiple IBM quantum computers to show demonstratable improvements in predicting the probability of winning customer inquiries.
Philip Intallura, HSBC group head of quantum technologies, says: “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.
“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.”
HSBC has been actively exploring the quantum computing realm, testing the boundaries of the technology in the digital gold markets, in payments and the FX industry.