Quid Pro Quo

AAA

DEFINITION of 'Quid Pro Quo'

A Latin phrase meaning "something for something". This term is typically used in financial circles to describe a mutual agreement between two parties in which each party provides a good or service in return for a good or service.

INVESTOPEDIA EXPLAINS 'Quid Pro Quo'

Quid pro quo agreements are sometimes viewed negatively. For example, in a quid pro quo agreement between a large financial house and a company, the financial house might alter poor stock ratings in exchange for company business. In response to these potential occurrences, the NASD has issued rules in order to ensure that firms put customers' interests before their own.

A positive example of a quid pro quo agreement is a soft dollar agreement. In a soft dollar agreement, one firm (Firm A) uses another firm's (Firm B) research. In exchange, Firm B executes all of Firm A's trades. This exchange of services is used as payment in lieu of a traditional, hard dollar payment.

RELATED TERMS
  1. Pro-Tanto

    A Latin phrase meaning "for so much" which is often associated ...
  2. Allotment

    During an IPO, this is the number of shares granted to each participating ...
  3. Anti-Reciprocal Rule

    A rule created by the Financial Industry Regulatory Authority ...
  4. Soft Dollars

    A means of paying brokerage firms for their services through ...
  5. National Association Of Securities ...

    The NASD was a self-regulatory organization of the securities ...
  6. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
RELATED FAQS
  1. Can a business charge me an extra fee for paying with my credit card instead of cash?

    In some states a business is permitted to charge an extra fee for customers paying with credit cards instead of cash. This ... Read Full Answer >>
  2. How does FINRA differ from the SEC?

    With all the financial organizations out there, knowing what they all do can be as complicated as knowing where to invest. ... Read Full Answer >>
  3. What are soft dollars?

    The term soft dollars refers to the payments made by mutual funds (and other money managers) to their service providers. ... Read Full Answer >>
Related Articles
  1. Fundamental Analysis

    Understanding Pro-Forma Earnings

    These figures can either shed light on a company's performance or skew it. Find out why.
  2. Economics

    Gas Dispute Poses Risks For Both The EU And Russia

    The Russia-Ukraine gas dispute has caused energy insecurity for the EU, which is seeking new gas suppliers, and market uncertainty for Russia's Gazprom.
  3. Investing

    What's a Monopolistic Market?

    A monopolistic market has a significant number of characteristics of a pure monopoly. Though there may be more than one supplier, the market has high prices, suppliers tightly control availability ...
  4. Investing

    Who are Stakeholders?

    “Stakeholder” is used in commerce to describe any party who has an interest in a business or enterprise. Traditionally, stakeholders in a corporation are shareholders, employees, customers and ...
  5. Professionals

    What are Fringe Benefits?

    Fringe benefits are non-monetary compensation employers give to employees. They are often associated with high priced perks given to top executives, but any employee can receive them. Fringe ...
  6. Investing

    What's a Subsidiary?

    A subsidiary is a corporation owned 50% or more by another corporation. The owning corporation is usually called the parent or holding company. A company that is 100% owned and controlled by ...
  7. Investing

    What's a Divestiture?

    Divestiture is when a company, government or other organization sells, shuts down or otherwise eliminates a division or operating unit. Divestitures happen for many reasons. Management may decide ...
  8. Professionals

    Master Limited Partnership (MLP)

    A master limited partnership, also referred to as an MLP, is a publicly traded partnership, where the limited partnership interests are traded much like shares in a corporation.
  9. Professionals

    Understanding Interpersonal Skills

    Interpersonal skills are the social skills people use to interact effectively with other people. A lack of good interpersonal skills may lead to unsuccessful personal relationships, as well as ...
  10. Investing

    Corporate Governance

    Corporate governance refers to the formally established guidelines that determine how a company is run. The company’s board of directors approves and periodically reviews the guidelines, which ...

You May Also Like

Hot Definitions
  1. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  2. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  3. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  4. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  5. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  6. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
Trading Center