An equivalent substitution by mutual agreement.

Literally, this means 'something for something.' In terms of finance, these somethings generally refer to a goods or services exchanged between separate parties. It tends to carry a negative connotation, often referring to the alteration of records to give customers a false impression of financial strength. For example, in a quid pro quo agreement between a large financial house and a company, the financial house might agree to make poor stock ratings appear better in exchange for the business of the company. The NASD has implemented several regulations in response to this practice that force firms to put the customers' interests before their own.

A soft dollar agreement is an example of a positive quid pro quo agreement. In this situation, one firm uses another's research and allows the firm to execute all of its trades in repayment. This is an effective way to make an exchange if adequate hard dollar payment is not available.