SMBC and Toshiba Launch SMBC/TOSHIBA Quantum Driven Diversified Japan and U.S. Equity Indices

Sumitomo Mitsui Banking Corporation and Toshiba Corporation have jointly developed the SMBC/TOSHIBA Quantum Driven Diversified Japan Equity Index and the SMBC/TOSHIBA Quantum Driven Diversified U.S. Equity Index, new equity indices realized with advanced quantum-driven technologies. Collectively referred to as the SMBC/TOSHIBA Quantum Diversified Indices, they combine SMBC’s financial market expertise with Toshiba’s quantum-driven optimization solutions to create well-diversified equity portfolios resilient to market shocks. Calculation of the indices has commenced with the end of 2015 as the base date.

Technical Design & Implementation Specifications

The indices draw their candidate securities from the constituent stocks of existing Japanese and U.S. equity indices. Components are selected quarterly via calculations performed by Toshiba’s Simulated Bifurcation Machine, a quantum-driven optimization computer that excels at solving large-scale combinatorial optimization problems intractable for conventional classical computers. Individual stock weights are assigned based on historical price volatility.

Key features include:

• Rigorous optimization to select subsets of stocks maintaining low correlations between constituent pairs, preserving diversification even in broad market downturns.
• Practical methodology incorporating liquidity considerations and controls on rebalancing transaction costs, with a joint patent application pending.

Toshiba’s technology is offered more broadly as SQBM+, a quantum-inspired solution implemented on classical hardware.

Commercial Positioning & Market Integration

SMBC led index development leveraging financial engineering expertise from its global markets and treasury divisions and will promote diversified investment strategies based on the indices to asset management companies. Toshiba supplies the customized Simulated Bifurcation Machine technology, manages system maintenance, and executes the quarterly rebalancing calculations.

Daily index calculation and distribution are handled by S&P Dow Jones Indices (S&P DJI), a leading global index provider, ensuring accurate adjustments for corporate actions and transparent data delivery.

The launch initiates broader collaborative efforts, with initial exploratory discussions underway for linked index funds, ETFs, and other investment products offering practical diversification options to investors in Japan and overseas. SMBC and Toshiba intend to expand applications of quantum and quantum-driven technologies across the financial sector.

Find out more here.

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