SSE Revises the Guideline on Major Categories of Underlying Assets for Asset-Backed Securities to Propel High-Quality Bond Market Development

To provide greater predictability for market entities and push forward high-quality business development, the Shanghai Stock Exchange (SSE) revised and released the Guideline No. 2 for the Confirmation of Shanghai Stock Exchange Asset-Backed Securities Listing Condition - Major Categories of Underlying Assets (2026 Revision) (hereinafter referred to Guideline No. 2) on July 24. Guided by the China Securities Regulatory Commission (CSRC), the revision represents a concrete step by the SSE in establishing a more open, transparent, and predictable institutional framework for asset securitization products and in further building up the bond market's capacity to serve the real economy.

New Chapter on Real Estate Assets to Support the Development of a Multi-Tiered Real Estate Securitization Market

In recent years, real estate securitization has expanded at a fast pace, becoming an important instrument for revitalizing existing assets and broadening equity financing channels. Real estate asset-backed securities with equity-like characteristics (hereinafter referred to as "inter-institutional REITs") represent the latest innovation in the asset securitization market and serve as a key component of a multi-tiered REITs ecosystem. After more than two years of exploration, inter-institutional REITs listed on the SSE have reached an issuance scale of nearly RMB 100 billion. These products now cover 15 sub-sectors, including expressways, rental housing, warehousing and logistics, data centers, commercial properties, and new energy infrastructure. They have provided state-owned enterprises, private enterprises, foreign-invested enterprises, and other market entities with an effective capital market tool to unlock the value of existing assets and facilitate the transition of business models. As market participants have developed a fundamental understanding of the characteristics, structures, and functions of these products, the market is now well positioned for further refinement of institutional arrangements and product standardization.

The latest revision of Guideline No. 2 introduces a dedicated chapter on real estate underlying assets, setting out clearer admission criteria and information disclosure requirements. The key revisions include: first, Guideline No. 2 adds a new chapter on real estate underlying assets, addressing the previous absence of specific provisions in this regard. The revision clarifies the definition and categories of real estate underlying assets, while establishing standardized requirements for project control, asset restructuring, state-owned asset transfers, and other admission criteria. Second, Guideline No. 2 introduces a dedicated section on special provisions for inter-institutional REITs. It has rules in place that define real estate ABS with equity-like characteristics as "inter-institutional REITs" (formerly known as "holding-type real estate ABS"), further clarifying their equity-like product characteristic and regulatory requirements.

Refining Key Considerations for Reviewing Major Categories of Underlying Assets and Strengthening Credit Quality Controls

Taking into account regulatory reviews, policy priorities, and market concerns, the latest revision of Guideline No. 2 fine-tunes several existing provisions. The process incorporated extensive input from market entities and brought into the latest requirements from recent review practices. The key amendments include: First, Guideline No. 2 strengthens access requirements for factoring receivables ABS products. They clarify that the funds used by factoring companies to pay factoring consideration must not be advanced by debtors. The revision also reinforces factoring companies' due diligence responsibilities in verifying the authenticity of receivables entering the asset pool and the compliance of underlying transaction contracts, while refining review requirements for trade-related receivables. Second, Guideline No. 2 places greater emphasis on asset credit and raises requirements for underlying asset quality. This strengthens the obligations of asset managers and intermediaries to verify the independence of underlying asset cash flows and the fairness of related-party transactions, helping hedge against risks arising from the commingling of cash flows. Third, the revision incorporates insights from regulatory practices and adds specific areas of focus for different underlying asset categories. It clarifies admission standards for financial leasing assets, for instance, by stipulating that leased assets must not include consumer goods or low-value consumables, while strengthening assessments of asset disposability. It also adjusts the upper limit requirements for individual online consumer loans, placing greater constraints on leverage levels in online lending facilitation businesses. In addition, it further refines requirements for future operating revenue-based projects, including the need for specific original equity holders to demonstrate adequate coverage of operating costs.

Looking ahead, the SSE will, in line with the new development stage and development philosophy, remain committed to the overarching objectives of "preventing risks, strengthening regulation, and promoting high-quality development". Guided by the CSRC, the SSE will implement the principles of "solidifying foundation and bolstering supervision", uphold openness and transparency, improve the regulatory framework for asset-backed securities, and encourage market entities to fulfill their respective responsibilities. By further unlocking the potential for innovation and development in the market, the SSE will give fuller play to the role of the asset securitization market, advance the high-quality development of the bond market, better serve the building of a new development paradigm, and continuously build up its strength to serve national strategies and the real economy.