Quantum Cryptography: Accelerating social implementation through successful experiment with large-volume financial transaction data by NICT and collaborators

The group composed of Nomura Holdings (Nomura HD), Nomura Securities, the National Institute of Information and Communications Technology (NICT), Toshiba, and NEC started joint verification on the effectiveness and practicality of quantum cryptography technology in December 2020 and announced on January 14 this year that they succeeded in a verification experiment of highly confidential communication and low-latency transmission of large-capacity financial transaction data via quantum cryptography as a use case for the stock trading business, which strictly requires high-speed, large-capacity and low-latency data transmission; the aim is the social implementation of quantum cryptography technology in the future. With this success, it is expected that the implementation of quantum cryptography technology into fields beyond finance will be accelerated.

The threat of cyber-attacks on financial institutions has increased in recent times, and further strengthening of security measures is required. In stock trading, “algorithmic trading", in which a computer automatically determines the timing and quantity of stock trading orders and repeats orders according to stock prices, quote information, trading volume, etc., is widespread through the industry, and the daily trading volume of in Japanese domestic stock exchanges exceeds 3 trillion yen. This means that a communication method that can withstand a huge amount of transaction data transmission is required.

In this experiment, the group verified, for the first time in Japan, the low latency and resistance to large-volume data transmission when transmitting a large amount of highly confidential data conforming to the message transmission format (FIX format) that is the standard in stock trading. As a result, in this assumed use case, the group was able to confirm the following two points: (1) the throughput is maintained at a level of a conventional system, even if quantum cryptography is applied, and (2) even if a large number of stock orders are placed, highly secure and high-speed quantum cryptographic communication can be realized without depleting cryptographic keys. This joint verification was conducted as part of the Strategic Innovation Promotion Program (SIP) “Photonics and Quantum Technology for Society 5.0 ”(Management Office: National Institutes for Quantum and Radiological Science and Technology) led by the Cabinet Office.

In the joint verification system, low latency, and large capacity tolerance were verified using an encryption device that uses a key from quantum key distribution (QKD) equipment that places key information on photons, which are particles of light, and shares encryption keys. For verification, NICT set up a simulated financial transaction environment that imitates investors and securities companies on the test communication network environment “Tokyo QKD Network” built by NICT in 2010. Nomura HD / Nomura Securities developed an application that generates simulated data that matches the messaging data format (FIX protocol), which is the standard for actual stock orders. In addition, two types of encryption methods, One-Time Pad (OTP) and Advanced Encryption Standard (AES), were used to encrypt the transmitted message. Of these, OTP has high security (information-theoretic security) so that no third party with any computing power can decrypt the code. However, since the encryption key required is as large as the transmission data, the problem of the key being exhausted occurs.

Due to these characteristics, this time, AES was used together as a preparation for key depletion. For implementation, the group adopted a high-speed OTP device newly developed by NICT to enable high throughput at the Gbps level. AES, unlike OTP, is not information-theoretic secure but requires astronomical calculations to decrypt and is safe due to its computational complexity (computational security). In this use case, by updating the encryption key generated by QKD in a short time, it was thought that even the AES method has sufficient security strength; subsequently, AES256, which uses a 256-bit key length, was selected as an alternative method for OTP. There are two types of AES256 mounting: a software-based mounting method (SW-AES) and a method using an NEC-developed line encryption device (COMCIPHER-Q), which has lower latency.

Using the above three types of encryption methods: high-speed OTP, SW-AES, and COMCIPHER-Q, the group measured, compared, and verified the communication performance of each. At the time of verification, a test case was set according to the actual stock trading business based on the key exchanged with the high-speed QKD device developed by Toshiba and the QKD device developed by NEC. By measuring the response times of multiple different data encryption methods during large-capacity data transmission, the practicality of QKD and each encryption method was verified.