Test Driven Regulation is an approach where regulatory experts from banks , regulators and vendors collaborate to define openly available test suites for regulatory calculations.
Such test suites contain links to the regulatory text that they are testing.
Banks have the legal responsibility for the calculated numbers that they report to regulators (regardless of who wrote the technical calculations). This means that the testing of regulatory calculations is a task that banks always need to do when regulations and their technical implementations change (which is constantly). Currently each bank does this expensive task separately, creating a huge duplication of effort.
Software vendors can benefit greatly being involved in such collaboration, gaining agreement from users up front on the correct implementation of regulatory calculations.
Regulators can provide clarity on the correct interpretation of regulatory rules by being involved in the collaboration