What restriction applies when a firm provides investment research?

When a firm provides investment research, the restriction that applies is that the firm must wait for client reaction before dealing. This is primarily to prevent conflicts of interest and to maintain fairness among clients. If a firm were to act on its own research without allowing clients the opportunity to react, it could lead to a situation where the firm benefits at the expense of its clients. This waiting period helps ensure that all clients have a fair chance to make informed decisions based on the provided research before the firm itself takes any action that could impact the market or the clients' investments.

In contrast, allowing immediate dealing after issuing research or charging clients for research services could undermine the integrity of the research presented, leading to potential biases. Requiring client approval for independent trades suggests a level of oversight and control that typically does not align with standard practice regarding research distribution. Therefore, the need to wait for client response is crucial in maintaining ethical standards and protecting client interests in investment activities.