The UK and Switzerland will not join the European Central Bank's pan-European settlement system for shares, the ECB said on Tuesday, though it added that the two countries' boycott of the scheme would not force it to hike the costs for users.

The ECB is building its Target 2 Securities (T2S) platform which it hopes will offer a one-stop shop for settling trades of securities such as shares from mid 2015.

The British and Swiss decisions to opt out of T2S will mean sterling or Swiss franc trade cannot go through the system. This will be a blow for the project, especially as London is home to Europe's biggest stockmarket.

T2S has already been hit by a string of delays caused by technical issues and in-fighting, as banks reluctant to pay for new technology and clearing houses looking to protect their own businesses, have attempted to stall the project.

Jean-Michel Godeffroy, the ECB official leading T2S, said the latest setback would not derail the plans, however, and would not force it to up its prices, something that would make it less attractive for the banks and brokers meant to be its users.

There has been some speculation that this will leave T2S unable to keep its commitment to the price of 15 cent per DvP instruction. I want to quash such speculation, Godeffroy wrote in a quarterly update on the project's progress.

The pricing model has been calibrated on the basis of conservative assumptions. The 15 cent commitment only requires 20 percent of volumes to be made up of non-euro currencies, which can still be achieved without the participation of the Swiss franc and the pound sterling.

In a bid to kick-start a switchover to T2S he added the ECB would offer discounts for early adopters, including waiving the system's join up fee, three months of free use and a further third off until January 2017.

The UK's resistance to T2S is due to its fear that it will give the ECB, which oversees the project, too much control over sterling securities trading.

In July, the ECB further angered the UK by issuing new rules that will force clearing houses to be located in the euro zone if they handle large amounts of euro-denominated securities.

(Reporting by Marc Jones; editing by Patrick Graham)