HSBC Holdings has declared a world-first achievement in deploying quantum computing within financial markets. The London-based bank announced that it utilized IBM’s state-of-the-art Heron quantum processor to enhance the accuracy of predicting bond trading probabilities. In collaboration with IBM, HSBC applied quantum processing to anonymized European corporate bond trading data, discovering that the technology significantly improved computational efficiency.

This marks a breakthrough as the bank has employed real trade data for the first time. HSBC’s trial explored the potential of quantum computing in over-the-counter (OTC) markets, where assets are bought and sold directly between two counterparties without the involvement of an exchange or broker. While the trial was not an actual transaction, it served as a real-world demonstration on an industrial scale.

As technology companies strive to master quantum computing, financial giants such as JPMorgan, Goldman Sachs, Citigroup, and HSBC are also investing in this field. Consulting firms McKinsey and KPMG assert that this technology could vastly expand banks’ capabilities in risk management, portfolio optimization, fraud detection, and asset price forecasting under various market scenarios.

Quantum computing is based on principles of quantum physics. Like traditional computers, quantum computers use tiny circuits to perform computations, but they do so in parallel rather than sequentially. This allows them to solve complex problems much faster than classical processors.

At the end of last year, Alphabet, Google’s parent company, achieved a significant milestone: its latest quantum processor, Willow, solved a problem in five minutes that would take even the most powerful supercomputers in the world the entire age of the universe to complete.

Other banks are also reporting breakthroughs in quantum computing. For instance, JPMorgan announced in March that it had generated and certified so-called truly random numbers using a quantum computer, a world first. This technology could be useful in encryption, security, and trading. According to an article published in the scientific journal Nature, researchers created this sequence using a machine from the company Quantinuum. Last year, KPMG stated in its report that the technology is still in the early prototype stage but may be approaching its tipping point.

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