Water reform: Insider traders face $626,000 penalty

A draft Water Market Reform Bill paves the way for a new code of conduct and imposes hefty penalties for insider trading.

Every water trade in Australia will be given an identification number that will allow the BOM and ACCC to track each buyer, seller and broker.

Anyone caught insider trading or manipulating water markets faces a penalty of up to $626,000, under draft legislation due to go before the federal Parliament this year.

An exposure draft of the Water Market Reform Bill went out for just three week’s consultation last month, despite federal bureaucrats, consultants and the nation’s competition watchdog working on the issue since August 2019.

The Bill creates the legal framework to create a Code of Conduct to which anyone who acts as an intermediary in a water trade must comply.

The Code is yet to be developed, but it will be enforced by Australian Competition and Consumer Commission and apply to any broker, solicitor, real estate, stock agent or any individual who facilitates a water trade.

Australian Water Brokers Association president Andrew Martin said solicitors and agents, who may only facilitate one or two water trades a year, would have to adhere to the code, new regulations and data standards.

Mr Martin said the intention of the new water trading laws was to identify every trade with a unique number.

The Bureau of Meteorology has already drafted a new Water Market Standard, which proposes using ABNs and ACNs to identify buyers and sellers, as well as brokers and other intermediaries associated with each trade.

The BOM director will also be given the power to demand water market information that must comply with the new data standard and regulations.

The draft Bill states no excuses, such as confidentiality or commercial sensitivity, can be given for not supplying trade data to the BOM.

But Mr Martin said brokers were wary of any attempt by the BOM to publish trade data in real time.

As it stands the BOM already collates water market data, but when the The Weekly Times checked the latest allocation and trade data for Victoria on its website this week, it stated it was “Last updated: 22/06/2023”.

The Bill also proposes repealing rule 12.23(2) of the Basin Plan, to remove trade exemptions on tagged water access entitlements that were established before October 22, 2010.

The 2019 ACCC inquiry found that the grandfathered tags exemption in the plan’s water trading rules is inequitable, and recommended it be removed.