LONDON, March 28 (Reuters) - Britain's stock markets

should halve the time it takes to settle a share trade to stay

competitive and complete this shift by the end of 2027, a report

recommended on Thursday, a step the UK government has backed to

play catch up with Wall Street.

Exchanges in the United States, Canada and Mexico move to

settlement within one business day - dubbed T+1 - at the end of

May to cut risk, catching up with India and China, meaning 55%

of global equity markets will operate on T+1 or less by the end

of this year.

This is piling pressure on Britain and continental Europe to

follow suit. The European Union has already said it would do so,

though with no date set. Switzerland will have little choice but

to switch as well.

Britain's finance ministry commissioned the report into

cutting settlement times for trades on the London Stock Exchange ( LDNXF )

and other platforms. This would reduce the time it takes to

settle trades for cash to one business day from two currently.

The Accelerated Settlement Taskforce, which produced the

report, found there was industry consensus to move to T+1 given

that increasing efficiency is essential to maintain

international competitiveness.

Taskforce Chair Charlie Geffen said government and

regulators needed to push for a coordinated move to T+1 given

that it will mean "significant investment", but also bring cost

savings and reduce risk.

"It just makes sense to have a timetable and a deadline. If

you don't have timelines, stuff doesn't get done," Geffen told

Reuters.

"Learning the lessons from the United States is going to be

important. I suspect there will be some teething issues to

resolve."

European asset managers have already complained about not

having enough time to find dollars to pay for U.S. stocks under

the new settlement regime which comes into effect in the United

States at the end of May.

Switching is costly. In the report, consultants Accenture ( ACN )

estimated that in relation to the T+1 switch in the U.S., total

investment of $30-50 million a year for three years would be

needed by each large financial firm to make the switch.

Geffen recommended setting up a technical group to report by

year-end on operational changes that will cost millions of

pounds, such as back office automation at banks and asset

managers. The industry should complete this by the end of 2025

to get systems ready.

The technical group would decide on a deadline for a

mandated switch to T+1 which would be the end of 2027 at the

latest.

"I am delighted to confirm that we are accepting all of the

recommendations that the report makes to the government,"

Britain's financial services minister Bim Afolami said in a

joint statement with the Taskforce.

Stocks make up 42% the 8.8 trillion pounds ($11.10 trillion)

of assets managed out of London, with 32% of this in North

American stocks and 19% in European stocks.

ALIGNMENT OR GO IT ALONE?

The stock settlement switch adds to a whole string of

regulatory changes the UK finance industry has faced

post-Brexit.

Geffen said it had been difficult to achieve consensus on

the pace at which Britain should move to T+1, with some wanting

EU alignment, while others want the mismatch with Wall Street to

be as short as possible.

Britain, the EU and other European jurisdictions should try

to work together to try to align the shifts to T+1, the report

said.

EU regulators have noted that the bloc has multiple stock

exchanges, and clearing and settlement houses, making a switch

to T+1 more complicated than for a single jurisdiction.

"If the EU or other European jurisdictions commit to a

transition date to T+1 the UK should consider whether it wishes

to align with that timeline," the report said.

"However if that cannot be achieved within a suitable

timescale the UK should proceed in any event."

Jos Dijsselhof, CEO of SIX Group, which operates the Zurich

stock exchange and the Madrid bourse in the EU, said he would

like to see Britain, the EU and Switzerland adopt T+1 at the

same time. "We don't see much benefits from everybody going

individually," he told Reuters.

Whether firms that want to move early to T+1 would be

allowed to do so after 2025 is an issue the technical group

would work through, Geffen said.

The report also said the technical group should consider a

move at a later date to instant settlement or T+0, which was

"technically possible today".

($1 = 0.7925 pounds)