Leading water brokers have welcomed the Australian Competition and Consumer Commission report into markets.
The ACCC recommended an independent Water Markets Agency should be established to oversee trading and ensure markets in the Murray-Darling Basin operated fairly and with integrity.
The creation of a new agency was among 29 recommendations in the final report of the ACCC's Murray-Darling Basin water markets inquiry.
Anthony McCloskey, Key Water, said the ACCC appeared to have focused on the areas that needed to be addressed, including transparency, regulation and management.
"Both as a broker myself and as Vice-President of the Australian Water Brokers Association, I strongly support the report's findings and recommendations," Mr McCloskey said.
"Regulation of the broker industry is very important to increase confidence among water market participants."
He said the AWBA had been working with various water authorities for some time towards this.
"Whether this will fall under the scope of the proposed Water Markets Agency or be left to state authorities remains to be seen, but either way will be better than current arrangements," he said.
"It will also provide the means to punish and/or remove those who act improperly."
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Bendigo-based broker H2OX chief executive Lex Batters said the company was broadly supportive of the ACCC's recommendations for water market reform.
That included the recommendation for the establishment of water market conduct and integrity legislation and the establishment of a Water Market Agency.
"Regulation of the water market is something H2OX has been calling for since its inception," Mr Batters said.
"Whilst supportive of the outcomes, we are also disappointed the ACCC did not seize the opportunity to press for broader reform across the water market.
"We note many of the recommendations in the report relate to post trade transparency processes, which whilst in need of improvement will do little to improve critical aspect of pre-trade transparency and market participant decision making."
Pre-trade transparency, relating to price discovery and liquidity, was the biggest issue in the water market.
Only one of the ACCC's recommendations related to that issue: the establishment of a public facing Water Market Information Platform.
"Such an idea has been attempted before, by way of the National Water Market System and other state based and private sector initiatives, resulting in huge costs and limited benefits to most water market users," Mr Batters said.
"A water market information platform is only as good as the data that supplies it.
"Whilst the ACCC recommends making significant and useful improvements to post trade data, pre-trade data relating to price discovery and liquidity is reliant on data from intermediaries.
"With most brokers operating paper based over-the-counter markets, data flow of key information such as price and water availability will remain poor."
Mr Batters said in H2OX view many of the recommendations targetted post-trade improvements, which was of limited benefit to irrigators trying to discover the price of water and the amount available.
"By not tackling pre-trade transparency, market participants will still be forced to transact in a market where information asymmetry is rife, resulting in a market where there is not a level playing field for all participants."
Waterfind chief executive and founder Tom Rooney, said he had been a long-term advocate for water market reform and supported the recommendations, including the decision to establish an independent, agency.
"With water markets now more complex and important in the national water management landscape, Waterfind is pleased to see that this report addresses critical issues and concerns and recommends a package of reforms that market participants will ultimately benefit from," Mr Rooney said.
"Implementation of these recommendations will build stronger market integrity and conduct, making market governance more transparent and predictable.
"The proposed centralised agency will improve market oversight and help to ensure that water markets are efficient and fit-for-purpose."