HSBC has announced a quantum computing breakthrough in algorithmic trading, claiming to be the first in the world to demonstrate the value of quantum technology in the financial services industry. In collaboration with IBM, HSBC conducted a trial using a combination of classical computing and IBM's Heron quantum processor. The results showed a 34% improvement in predicting bond price movements through algorithmic trading.

The trial focused on optimizing requests in over-the-counter markets, where assets are traded without a centralized exchange or broker. Algorithmic strategies and statistical models are used to estimate the likelihood of a trade being filled at a quoted price. HSBC and IBM utilized real, production-scale trading data on IBM quantum computers to predict the probability of winning customer inquiries in the European corporate bond market.

Philip Intallura, HSBC's group head of quantum technologies, hailed the trial as a "ground-breaking world-first". He stated that the improvement in trade predictions translates to "increased margins and greater liquidity". Intallura also noted that this achievement represents tangible evidence of how quantum computers can solve real-world business problems at scale and offer a competitive edge. He believes that this is the beginning of a new era of computing in financial services. In a Wednesday Bloomberg report, Intallura likened the achievement to a "Sputnik moment" for quantum computing, referencing the Soviet satellite launch that initiated the space race.

According to HSBC, the IBM Heron processor augmented classical computing workflows to better unravel hidden pricing signals in noisy market data compared to standard, classical-only approaches. The bank believes this trial represents the first empirical evidence that quantum computers can solve practical problems in algorithmic bond trading.

HSBC said that blending quantum techniques with classical computing allowed algorithms to uncover hidden pricing signals buried in noisy data, enhancing quote accuracy without distorting risk metrics. The bank called it a milestone that shows quantum computing is no longer a theoretical exercise but has measurable impact today.

The experiment used IBM's 156-qubit Heron quantum processor to analyze real production-scale trading data. The quantum-enhanced system delivered up to 34% better accuracy compared to classical computing approaches currently used across Wall Street. The trial employed a hybrid quantum-classical approach where quantum processors augmented traditional computing workflows to better identify pricing signals in noisy market data.

HSBC intends to continue refining its hybrid quantum-classical algorithms and plans to scale trials across other asset classes. Potential applications include risk management, portfolio optimization, and derivatives pricing. The bank also plans to expand partnerships with academic researchers and fintechs to accelerate development. IBM is investing in scaling its processors and deepening ties with industry verticals.

HSBC's experiment suggests quantum computing is beginning to offer real financial advantages, potentially reshaping algorithmic trading long before mainstream adoption. According to McKinsey, the global quantum technology market could reach $100 billion within a decade. Financial services are expected to be a major driver of that growth.