The Australian Competition and Consumer Commission on Thursday released its interim findings into the $1.5 billion-a-year trade.

It found market intermediaries such as brokers and water exchange platforms operate in a mostly unregulated environment that fosters conflicts of interest and dodgy reporting.

There are few safeguards against price manipulation and no body monitoring trading activities of market participants.

Information failures limit the openness of markets and favour better-resourced and professional traders, the ACCC found.

"The basin's water rights markets have serious problems that have to be fixed now, to generate more of the potential benefits of water trade," the report says.

"The current markets' rules are deficient, enforcement of them is inconsistent and limited and the overall governance of the basin's water trade is troubled."

The watchdog found market participants are denied an accurate picture of water trade including price, supply and demand because of different processes across states.

Irrigators and other traders have inadequate access to important information that significantly impacts water pricing.

ACCC deputy chair Mick Keogh said water markets had brought significant benefits to irrigators across the Murray-Darling Basin.

"However, these markets have significant problems," he said on Thursday.

He criticised complex regulation across some areas and a concerning lack of oversight in others.

"This has led to a lack of trust in the markets among many water users and has undoubtedly reduced the benefits generated by those markets," Mr Keogh said.

"These problems exacerbate distrust when water is scarce or when demand is increasing. They make a difficult situation worse."

The ACCC proposes a licensing scheme for brokers or extending financial regulations to all water products.

It has also floated appointing a single regulator to oversee basin markets, similar to energy and financial services.

National Farmers' Federation chief executive Tony Mahar said the report showed the need for decisive, rapid and comprehensive reform.

"By not implementing recommendations to improve the plan, governments are perpetuating the pain suffered across the basin and demonstrating utter contempt for farmers, communities and the environment," he said.

Treasurer Josh Frydenberg and Water Minister Keith Pitt said the ACCC's preliminary views showed the water market brought benefits to irrigators but needed changes.

Opposition water spokeswoman Terri Butler said Labor had for some time been calling for action to address a disastrous lack of transparency that paralysed farmers.

"The lack of transparency in this market is failing farmers, communities and the nation," she said.

Australian Associated Press