quid pro quo (redirected from Quid-pro-quo)

Quid Pro Quo

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

Notes:

Quid pro quo agreements are sometimes viewed negatively. Here are a couple examples of negative quid pro quo activities:

1. For IPOs a quid pro quo agreement suggests that the underwriter has allotted offering shares so that commissions can be maximized but are not equitable to all houses involved.

2. In a quid pro quo agreement, large financial houses will 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 the interest of the customer first.

A positive example of a quid pro quo agreement is a soft dollar agreement, whereby Firm A uses research from Firm B in exchange for Firm B executing all of Firm A's trades.

See also: Allotment, IPO, NASD, Soft Dollar, Underwriting

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Quid pro quo

An arrangement allowing a firm to use research from another firm at no cost in exchange for executing all of its trades with the firm that provides the research.

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quid pro quo

An equal exchange that a person or firm makes with another person or firm. In the securities industry institutional investors provide orders to brokerage firms as a quid pro quo for in-depth research.