UOB-CQT pact explores quantum tools for derivative valuation

The initial phase will focus on path-dependent instruments.

UOB and the Centre for Quantum Technologies (CQT) have partnered to explore how quantum computing techniques can be applied to the valuation of complex financial derivatives. 

Both groups will assess how such methods could process large volumes of scenarios more efficiently under certain conditions to manage derivative risks.

The project’s initial phase will focus on path-dependent instruments, whose valuations depend on multiple market variables and historical price movements.

CQT researchers at the National University of Singapore (NUS) will work on the project with support from the National Quantum Computing Hub (NQCH).

Financial derivatives include instruments such as options, futures and swaps defined for different kinds of assets.

UOB said current valuation methods, such as Monte Carlo simulations, run thousands of future market scenarios to derive fair values, making them time- and resource-intensive.

“As financial markets become more complex, the need for faster and more accurate risk modelling continues to grow,” Lawrence Goh, Head of Group Technology and Operations, UOB, said.

“By investing early and building a clear deployment roadmap, we are laying the foundation for the next generation of banking capabilities,” Goh added.

The project follows Singapore’s National Quantum Strategy announced in 2024. CQT and NQCH are both programmes supported under the initiative.