Tech roundup: First Canadian bank joins IBM quantum infrastructure

Bank of Montreal has joined IBM’s Quantum Network.

The move, announced on Feb. 6, makes it the first Canadian bank to join the network designed to give businesses, academic institutions and research labs access to quantum computing applications that can improve operational efficiency.

BMO plans to use IBM’s quantum computing applications to optimize portfolios and detect fraud, said Kristin Milchanowski, BMO’s chief AI and data officer.

“We have reached quantum utility,” Milchanowski, who has a PhD in quantum mathematics, said in an interview. “It’s not something that’s far off or unreachable or just hypothetical, it’s literally here now.”

Quantum computing can analyze more factors than classical computing, making it useful in portfolio construction, she said.

It can also speed up the process of pricing and assessing trade risk, which can take several hours with existing technology. Quantum computing has the potential to process the same information in minutes.

“Every fraction of a second when you’re trading makes a difference,” Milchanowski said.

BMO doesn’t have a timeline yet for an operational roll-out of the technology.

Although quantum computers can perform the same tasks as classical computing, IBM still has work to do to increase computing power, Milchanowski said. Quantum advantage is a future stage that will be unlocked by hardware advances, when quantum computing can perform processes better and faster than classical computing.

Margin trading on Wealthsimple

Wealthsimple has introduced margin trading for eligible clients, the firm announced on Feb. 5.

“We suspected margin accounts would be popular among those who asked for it … it’s one of our largest waitlists ever,” said Swapnil Parikh, vice-president of product with Wealthsimple, in a release.

Wealthsimple clients who are now eligible to open a margin account already have more than $40 million in margin balances accrued, Parikh noted.

Margin trading refers to the practice of borrowing from a broker to purchase securities, with the purchased securities used as collateral for the loan. In Wealthsimple’s case, clients use their existing funds in Wealthsimple accounts as collateral.

Wealthsimple won’t charge exposure or maintenance fees, Parikh noted.

The firm offers margin rates of 5.7% for those with less than $100,000 in assets, 5.2% for clients with $100,000 to $499,999, and 4.7% for those with $500,000 or more in assets, according to Wealthsimple’s website.

Margin trading has risk and may not be suitable for all investors. Wealthsimple has a “margin health tracker” that updates daily and instructs investors on what to do if they approach a margin call.