A MANDATORY code of conduct for all water brokers within the Murray-Darling Basin would put an end to concerns about dodgy practises within the water market, an independent advisory group says.
The proposal is one of five changes put forward by the group in an interim report about how to improve faith and transparency in the basin water market.
The advisory group, led by principal advisor and former department head Daryl Quinlivan, has been tasked with examining the 29 recommendations from the Australian Competition and Consumer Commission's investigation into the basin's water market, and a roadmap to implement the most cost-effective policy response.
Although the ACCC found little evidence of misconduct by water market intermediaries or market manipulation, it concluded both were possible without regulation changes.
The interim report aimed to nip both issues in the bud, recommending a mandatory basin-wide code of conduct for water market brokers and specific legislation to prohibit insider trading within the water market.
The advisory group also recommended developing a consistent Commonwealth-led basin-wide water market education program, to replace the current system that sees each state offering different amounts and methods of information, and collecting and publishing further trade data, such as reasons for trade and strike-date information to improve market transparency.
Removing grandfathering trade restriction exemptions for water entitlements established before 2010 was also flagged as a way to level the water market playing field.
"It seems likely that the most significant measures to be considered will be improving the systems and supporting infrastructure for recording and reporting trade transactions, and related market information," Mr Quinlivan said.
"Improving both public and private digital infrastructure, and the collection of water market data could improve decision making by all market participants and regulators, provide better access to information and improve confidence and participation of water users.
"Greater transparency will, to some extent, offset the unavoidable complexity in the basin arrangements, and suspicions about the conduct of others that has affected water management for many years."
Water Minister Keith Pitt said the advice was a "down payment" on the full roadmap that Mr Quinlivan and the advisory group would deliver in June.
"This is an important step in delivering water markets that operate more effectively and efficiently and don't burden users with unnecessary costs," Mr Pitt said.
"A mandatory code of conduct for water market participants, measures to improve transparency of water market information, and changes to ensure a level playing field for all entitlement holders are some of the recommendations presented within the initial advice.
"Importantly, there's a commitment to improve regulation to better protect against potential market manipulation and maintain confidence in the system."
All Murray-Darling Basin states have provided in-principle support for the changes.
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