NAB Morning Call Weekend Edition: View from the floor
Dec 12, 2025
Tim McCaughey, NAB's Head of Trading, shares insights into the intricate world of market-making. He likens trading to running a grocery store, explaining how they manage buying, pricing, and selling various asset classes. Discussions dive into balancing risk and profit, the vital role of AI in trading, and how geopolitical events influence market volatility. Tim also reveals how algorithms shape FX pricing and the importance of human oversight during crises, making it clear that while technology evolves, human intuition remains key.
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Episode notes
NAB Acts As Principal Market Maker
- NAB acts as a principal market maker: it buys into inventory and manages the resulting risk on its balance sheet.
- Revenue comes from pricing the spread and hedging that inventory across asset classes.
The Grocery-Store Analogy
- Tim likened trading to a grocery store that buys goods and marks them up for sale.
- The analogy explains how pricing and inventory decisions create the bank's edge.
Inventory Sits On NAB's Balance Sheet
- NAB holds inventory for clients: they sell bonds from their books and also buy bonds clients want to exit.
- That inventory sits on NAB's balance sheet until hedged or rebalanced.