The follow-up of 80 patients above the age of 70 years with implanted pacemakers is described. These patients were the most advanced in age from a total group of 150 with implanted pacemakers. Their ages ranged from 70 to 87 years, with an average of 75.4 years; 50 were male and 30 were female. An epicardial electrode was implanted in 13 patients and an endocardial electrode in 67. The pacemaker was implanted in 76 patients for symptomatic atrioventricular block and in four patients for sick-sinus syndrome. Two patients (2.5 per cent) died during the postoperative period and 19 patients within a period of 3 months to 6 years after the implantation. The survival rates were: 1 year, 90.0 per cent; 2 years, 82.1 per cent; 3 years, 74.1 per cent; 4 years, 67.2 per cent; 5 years, 58.3 percent. These survival rates were surprisingly similar, for the first 3 years of follow-up, to those of our and others' previous studies, which included all age groups. The survival rates in the most advanced age groups decreased in comparison only in fourth and fifth years after the implantation. There was no evidence of new episodes of myocardial infarction among this group of patients during the follow-up period. We conclude that even in patients of the most advanced age groups the implantation of an endocardial pacemaker significantly prolongs life, improves its quality, and this at a low operative risk.
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We are adopting the proposed exception from the uniform "locate" requirement, as Rule 203(b)(2)(iii), for short sales executed by market makers, as defined in Section 3(a)(38) of the Exchange Act,66 including specialists and options market makers, but only in connection with bona-fide market making activities.67 Bona-fide market making does not include activity that is related to speculative selling strategies or investment purposes of the broker-dealer and is disproportionate to the usual market making patterns or practices of the broker-dealer in that security. In addition, where a market maker posts continually at or near the best offer, but does not also post at or near the best bid, the market maker's activities would not generally qualify as bona-fide market making for purposes of the exception.68 Further, bona-fide market making does not include transactions whereby a market maker enters into an arrangement with another broker-dealer or customer in an attempt to use the market maker's exception for the purpose of avoiding compliance with Rule 203(b)(1) by the other broker-dealer or customer.69
As proposed, the rule would have specified that, for short sales of any security meeting this threshold, the selling broker-dealer must deliver the security no later than two days after the settlement date. If for any reason such security were not delivered within two days after the settlement date, the rule would have restricted the broker-dealer, including market makers, from executing additional short sales for the next 90 days in such security for the person for whose account the failure to deliver occurred, unless the broker-dealer or the person for whose account the short sale is executed, borrowed the security or entered into a bona-fide arrangement to borrow the security, prior to executing the short sale. In addition, the rule would have required the registered clearing agency that processed the transaction to refer the party failing to deliver to the NASD and the designated examining authority for such broker-dealer for appropriate action; and to withhold a benefit of any mark-to-market amounts or payments that otherwise would be made to the party failing to deliver.
We have considered the comments received, and have adopted a rule that differs in the mechanics from the proposed rule, but continues to preserve the goal of limiting failures to deliver in threshold securities. As adopted, Rule 203(b)(3) requires action if a fail in a threshold security remains open ten days after the settlement date, i.e., for thirteen consecutive settlement days.93 Specifically, Rule 203(b)(3) requires a participant of a clearing agency registered with the Commission94 to take action to close out the fail to deliver that has remained for thirteen consecutive settlement days by purchasing securities of like kind and quantity.95 In addition, Rule 203(b)(3)(iii) states that the participant, and any broker-dealer for which it clears transactions, including any market maker that would otherwise be entitled to rely on the bona-fide market making exception, is prohibited from effecting further short sales in the particular threshold security without borrowing, or entering into a bona-fide arrangement to borrow, the security until the fail to deliver position is closed out. To the extent that the participant can identify the broker-dealer(s) or account(s) that have contributed to the fail to deliver position, the requirement to borrow or arrange to borrow prior to effecting further short sales should apply to only those particular broker-dealer(s) or account(s). Rule 203(b)(3)(v) states that where a participant enters into an arrangement with a counterparty to purchase securities as required by Rule 203(b)(3), and the broker or dealer knows or has reason to know that the counterparty will not deliver the securities, the broker or dealer will not have fulfilled the requirements of the rule.96
We received a number of comments from market makers, including options market makers, on the proposal not to provide an exception for market makers from the special delivery requirements applicable to securities that meet the designated threshold.100 Some of these commenters stated that the effect of not including such an exception would be to cease altogether options trading in securities that are difficult to borrow, as it was argued that no options market maker would make markets without the ability to hedge by selling short the underlying security.101 In addition, another commenter stated that the heightened delivery requirements for threshold securities could drain liquidity in other securities where there is no current indication of significant settlement failures.102 The commenter believed that, while a blanket exception from the heightened delivery requirements would be preferable, at a minimum the implementation of any such provision should not apply to market maker positions acquired prior to the effective date of the rule, and likewise should not apply to any short position acquired prior to the time that the subject security meets the designated threshold.
We note that the close out requirements of Rule 203(b)(3) will only apply to fail to deliver positions in threshold securities, and will not apply to any fail to deliver positions established prior to the security meeting the threshold.103 As such, we believe that this addresses in part the commenters' concerns that market makers would need to assess the probability of a security meeting the threshold at some point in the future. Moreover, we expect that a small percentage of securities for which there are associated options will exceed the threshold.104 In light of this, we believe that the effects of not including a market maker exception from the heightened delivery requirement will not be as severe as some of the commenters have described. Moreover, while some of these commenters have opined that options market makers are not responsible for significant failures to deliver,105 other commenters and academics have questioned this assertion.106
Therefore, while market makers (including options market makers) engaged in bona-fide market making will continue to be excepted from the locate requirement of Rule 203(b)(1), even when effecting short sales in threshold securities, we have decided at this time not to extend an exception to market makers from the requirements to close out fails to deliver in such securities that remain for thirteen consecutive settlement days. Moreover, as discussed previously, Rule 203(b)(3)(iii) provides that until the market maker, or the participant that clears for the market maker, takes action to close out any such fails to deliver that remain ten days after the normal settlement date, the market maker shall be unable to rely on the exception in Rule 203(b)(2)(iii) from the requirement to "borrow or arrange to borrow" for further short sales in such security.
We have, however, included a limited exception from the close out requirement to allow registered options market makers to sell short threshold securities in order to hedge options positions, or to adjust such hedges, if the options positions were created prior to the time that the underlying security became a threshold security. Any fails to deliver from short sales that are not effected to hedge pre-existing options positions, and that remain for thirteen consecutive settlement days, are subject to the mandatory close out requirement. We will, however, take into consideration information that shows that this provision operates significantly differently from our expectations.
The Commission recognizes that locate and delivery requirements may increase costs for some market participants who engage in short selling. The Commission is, however, including an exception from the locate requirements of Rule 203(b)(1) for short sales executed by market makers in connection with bona-fide market making activities. In addition, any costs that initially may be incurred should be mitigated over time because the uniform rule should lead to regulatory simplification with regard to training and surveillance.
The rule includes certain exceptions from the locate requirement, which mitigate many associated cost burdens. The rule provides an exception for bona-fide market making. This exception covers short sales executed by market makers, including specialists and options market makers, in connection with bona-fide market making activities. Excepting bona-fide market making activity from the locate requirement will benefit investors and the market by preserving necessary market liquidity. 2ff7e9595c
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