Quid Pro Quo

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.

BREAKING DOWN '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. Quid Pro Quo Contribution

    A charitable donation for which the donor receives something ...
  2. Quid

    Slang for the pound sterling, the currency of the United Kingdom. ...
  3. Option Agreement

    1. A signed agreement between an investor who is seeking to open ...
  4. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities. ...
  5. Forward Rate Agreement - FRA

    An over-the-counter contract between parties that determines ...
  6. Gentleman's Agreement

    An unwritten agreement or transaction backed only by the integrity ...
Related Articles
  1. Investing

    Pro Forma

    Pro Forma is a Latin term that means "for the sake of form." It's a term mostly used in accounting, for financial statements prepared by accountants. So why would anyone do anything for the sake ...
  2. Retirement

    FAs Should Factor Clients Into Succession Plans

    Financial advisory firms are finally taking succession planning seriously. Here's how.
  3. Retirement

    Create A Pain-Free Postnuptial Agreement

    This marital contract can underline your love for each other - not undermine it.
  4. Economics

    How NDAs Work and Why They're Important

    A non-disclosure agreement, or NDA, is a legal document that keeps the lid on sensitive information.
  5. Personal Finance

    Master The Art Of Negotiation

    Learn the strategies that will help you to come out on top in any negotiation.
  6. Investing Basics

    What's a Reverse Repurchase Agreement?

    A reverse repurchase agreement is the buyer side of a repurchase agreement (also called a repo).
  7. Personal Finance

    Analyzing A REX Agreement

    These contracts can be an effective way for homeowners to hedge against declining house prices.
  8. Taxes

    Form 9465: Don't Pay Your Back Taxes Without It

    This form can lighten your tax load if you owe Uncle Sam.
  9. Personal Finance

    The Layoff Payoff: A Severance Package

    If you must leave your job, go out fighting for the best benefits you can get.
  10. Investing

    Ceteris Paribus

    Also commonly translated as "all other things equal", learn more about this latin phrase and its application in economics.
RELATED FAQS
  1. What are pro forma earnings?

    Great question, but it is not easily answered, because pro forma earnings figures are inherently different for different ... Read Answer >>
  2. Can pro forma financial statements be more helpful to analysts and investors than ...

    Examine the controversy over GAAP reporting standards as compared to pro forma statements, and learn which are considered ... Read Answer >>
  3. What is a typical price-to-book ratio in the financial services sector?

    Understand key distinctions of the financial services sector and learn some of the equity valuation metrics analysts use ... Read Answer >>
  4. What is each party's role in a reverse repurchase agreement?

    Learn about the role of each party in a reverse repurchase agreement transaction, and find out why it's different if the ... Read Answer >>
  5. What are the key differences between pro forma statements and GAAP statements?

    Learn the key differences between pro forma and GAAP statements. Review examples and cautionary notes about reliance on pro ... Read Answer >>
  6. What tax implications are there for parties involved with a reverse repurchase agreement?

    Learn about the tax consequences that the buyer can face as a result of a reverse repurchase agreement ("reverse repo") with ... Read Answer >>
Hot Definitions
  1. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  2. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  3. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  4. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  5. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center