Investors in the US are currently concerned about the $2.2 trillion market of repurchase agreement, also known as a repo, which is facing difficulties as the year coming to an end. Some analysts fear that the negative consequences may affect not only Wall Street but also the global financial market. The repo market came under pressure in September as the demand for funds to settle Treasury purchases and pay corporate taxes was high and actually exceeded the available loans. Interest rates for some loans in US stock markets soared up to 10%. This was four times more than the Fed’s rate, analysts stress. Since early September, the New York Federal Reserve conducted daily operations where it injected liquidity into the overnight market. These actions are regarded as the Fed’s first major intervention in the repo market. Fed’s support helped the markets to get through the period of  high corporate tax payments and Treasury debt settlements went rather smoothly. Notably, the Fed conducts repo operations only with major companies, while banks pass on liquidity to their clients. Closer to the end of the year, banks can be more reluctant to give such loans, so borrowers may expect difficulties with getting cash. Specialists at the Bank of International Settlements (BIS) think that growing financial dependence of the repo market on the biggest US banks may have become a key factor in reducing cash injections. The repo market is extremely important for the US financial system which largely relies on it to ensure banks, companies, and investors have the liquidity for their daily operations.The interest rate on repo deals is usually close to the Fed’s key rate and is currently set in a range of 1.50% to 1.75%. Experts are worried that trading in stocks and bonds can become difficult in the near future. What is more, the lending to businesses and consumers can be limited what can lead to a downturn in the American economy. A reduction in excess bank reserves that was recorded this September is reported to be the most damaging factor for the repo market. To reduce the risk of further disruptions, some investors suggest that a special backup mechanism should be implemented in the market  - the so-called standing repo. It is expected to help minimize risks to the financial system.