HSBC, in partnership with IBM, has achieved a significant milestone by demonstrating the first known practical application of quantum computing in real-world bond trading. This trial leveraged IBM’s quantum processors to improve HSBC’s algorithmic trading strategies, signaling a step-change in how financial markets could harness emerging quantum technologies.

Quantum Computing Meets Bond Trading

Algorithmic trading in the corporate bond market involves complex models that automate pricing of customer inquiries, taking into account real-time market conditions and risk assessments. These models allow traders to focus on larger or more intricate trades. However, the complexity of factors in OTC (over-the-counter) markets can limit classical computing systems’ efficiency.

The HSBC-IBM collaboration explored how quantum computing could optimize the probability of winning customer quotes in OTC bond trading. The trial focused on combining quantum and classical systems to process noisy market data more effectively, revealing patterns that classical models alone often miss.

Results and Implications

By integrating IBM’s quantum processors into trading algorithms, HSBC achieved a 34% improvement in predicting trade execution probability at quoted prices. This enhancement illustrates how quantum computing can augment classical systems, providing more accurate signals and improving trading outcomes.

Philip Intallura, HSBC’s Group Head of Quantum Technologies, noted: “This is a world-first in bond trading. It shows that today’s quantum computers can solve tangible business problems at scale and deliver a competitive edge.”

Jay Gambetta, Vice President of IBM Quantum, added that the trial demonstrates the potential when domain expertise meets quantum computational capabilities, creating opportunities that classical computing alone cannot achieve.

Looking Ahead

The success of this collaboration underscores the growing role of quantum computing in financial services, particularly in areas requiring optimization and analysis of complex, high-dimensional data. As quantum technology matures, financial institutions may gain more efficient trading strategies, better risk management, and enhanced decision-making capabilities.

This trial by HSBC and IBM represents a tangible step toward transforming traditional trading practices. By integrating quantum computing into real-world financial markets, the partnership has provided a blueprint for how emerging technology can complement classical systems and unlock new competitive advantages in the finance sector.