Citation :
Much like how the advent of algorithmic, high-frequency digital trading shook up the financial world in favor of large institutions who could afford the technology, the same could be said for this new quantum technology, but now on an unprecedented scale.
To illustrate just how important financial firms are taking these developments in quantum computing, D-Wave Systems recently raised over $130M, with Goldman Sachs (NYSE:GS) simply handing the company its own investment capital up front. CME Group (NASDAQ:CME), the largest futures exchange group, along with the Royal Bank of Scotland (NYSE:RBS) and Guggenheim, also have invested in the company. Although spokespersons for both Goldman Sachs and CME have been tight-lipped, declining to comment on what the companies exactly plan to do the technology, the assumption is clear.
In a recent paper by researchers from quantum software firm 1QBit, Guggenheim Partners, NYU Courant Institute and Lawrence Berkeley National Laboratory, the researchers consider how the technology can be used to solve "optimal trading trajectory" for multiple time-steps across a wide range of assets, i.e. frequent portfolio management. Currently, asset managers for large firms typically still rely on their own intuition to allocate assets and make portfolio management decisions on a day-to-day basis, using the historical data and technical forecasts fed to classical computers, transaction costs, etc. to determine the best course of action. A quantum computing method could perform all of those simulations on a day-to-day basis, thereby freeing up asset managers, bankers, etc., to focus on larger-scale capital trends and movements. While the current size of problems the annealers can solve is small, the researchers expect the technology to be able to solve for larger financial systems and with greater accuracy in future generations.
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