Milestone in Quantum Computing in Finance: HSBC Tests Show 34% Improvement in Trading Efficiency

HSBC's collaboration with IBM has achieved a milestone in the application of quantum computing in the financial sector, with results indicating that this emerging technology is expected to significantly enhance trading execution efficiency, injecting new momentum into Wall Street's exploration of the next frontier of computing power.

Europe's largest bank, HSBC, announced on Thursday that the company tested a quantum computing tool developed by IBM and found that it was 34% more efficient than traditional methods in predicting the likelihood of trade order execution. This achievement is based on a theoretical analysis of historical data from the European corporate bond market.

"This is our most tangible proof to date of how close we are to extracting value from quantum computing," said Philip Intallura, HSBC Group's head of quantum technology. He added:

"We firmly believe that we are at the forefront of a new realm of computing in financial services, rather than looking at a distant future."

Although this result currently remains theoretical, it indicates that quantum computing could have a significant impact on trading, especially in the over-the-counter (OTC) market where there is a lack of central brokers.

Key Findings: Quantum Tools Significantly Enhance Trading Prediction Efficiency

Quantum computing represents a new branch of computing, with its core advantage lying in the ability to process information using the principles of quantum mechanics. Jay Gambetta, Vice President of IBM Quantum, explained in a statement:

"It represents and processes information in a broader and more dynamic space than classical systems can access."

This capability stems from quantum bits (qubits), which are the fundamental building blocks of quantum machines, allowing computers to perform complex calculations at speeds far exceeding those of traditional computers.

Currently, tech giants are fiercely competing for leadership in the field of quantum computing. IBM is racing against its competitor Google, aiming to produce an industrial-scale quantum computer by the end of this decade. Beyond finance, quantum computing is believed to drive breakthroughs in scientific research, including drug development.

The testing conducted by HSBC and the IBM team was based on an analysis of over 1 million quote requests from September 2023 to October 2024, involving more than 5,000 bonds. The study aimed to validate the performance of quantum tools in predicting the probability of quote request execution.

While the 34% efficiency improvement is remarkable, a published research report also cautiously pointed out that this conclusion was drawn from a specific historical dataset. The report cautioned that these findings "do not guarantee universality for other market environments or trading datasets."

While quantum computing holds the potential for a revolutionary efficiency boost in financial trading, it also brings new risks. Experts are concerned that the emergence of quantum computing will pose a threat to existing widely used sensitive data encryption technologies, including those used internally by financial institutions such as banks.