Quantum computers trading: HSBC's 'promising trial' brings new tech into bond investments

British bank HSBC said on Thursday that it had tested the use of quantum computing in the European corporate bond market, marking a world-first breakthrough.

Working with a team from IBM, HSBC found that the new technology brought a 34% improvement in predicting how likely a bond would trade at a given price.

If the technology is adopted, this could help banks and investment firms price bonds and other assets more accurately.

“This is a ground-breaking world-first in bond trading," Philip Intallura, HSBC group head of Quantum Technologies, said in a statement.

"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."

Quantum computing uses quantum mechanics to process information and solve certain problems that are out of reach for even the most powerful classical supercomputers. The technology so far has been largely serving research purposes in laboratories; this is the first time it has been deployed to support financial trading.

In this test, IBM’s most advanced quantum processor, Heron, supported HSBC’s existing systems in spotting hidden patterns in the vast amount of bond market data, producing better results than traditional computers.

The technology appeared to rapidly price customer inquiries, adapt to fast-changing trading conditions and predict whether a bond trade was likely to succeed at a quoted price, while factoring in real-time market data and risk estimates.

HSBC said the trial was 'promising' and could allow quantum computers to optimise bond trading, including "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".

The bank is confident that the near-term application of quantum technology is within reach. Intallura added: "We have great confidence that we are on the cusp of a new frontier of computing in financial services, rather than something that is far away in the future.”