HSBC's quantum computing breakthrough could be the future of Wall Street
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The global bank HSBC has successfully deployed quantum computing technology to optimize bond trading — a first.
Why it matters: It's a sign that Wall Street could be more about technology and financial models than about people in the not-so-distant future.
Driving the news: In a trial, HSBC used IBM's most advanced quantum processor to gain a 34% improvement in predicting how likely a bond would trade at a specific price, compared to traditional methods.
- This is the first known quantum-led algorithmic trade in history.
- AI-driven, algorithmic trading is nothing new, but quantum computers can supercharge these efforts by increasing accuracy and efficiency, HSBC tells Axios.
What they're saying: It's not about taking jobs away from people, Philip Intallura, HSBC's group head of quantum technologies, tells Axios.
- "What we're really doing with quantum is trying to fine-tune and optimize already existing models in the bank that are making decisions or running calculations for business processes," he says.
Between the lines: Achieving this goal first would put HSBC in a favorable position.
- "I mean, any technology or ability to generate competitive advantage is going to be something that competitor banks are going to be interested in and are going to ... want to explore in the same way," Intallura says. "Quantum will fit into that emerging technology that other banks will look to leverage to generate potential competitive advantage."
💭 My thought bubble: As readers probably can tell, I'm fascinated by Wall Street's bemoaning the continued strength of the modern retail investor.
- Retail makes up about 25% of daily trading volume. I've had plenty of sources at the world's biggest financial firms complain to me about how hard it is to beat the index because that quarter of the market is made up of investors who keep buying the dip and disrupting standard investment patterns.
- Quantum computing seems like the type of innovation that Wall Street could leverage to hurdle over retail with ease.
- Will retail stand a chance in a quantum finance world?
