Now that Ameritrade is most likely gonna aquire TD Waterhouse, and Ameritrade's management won't agree to a merger with Etrade, more mergers have to happen. With TDW's trading activity added onto Ameritrade's number of daily trades, they will have a large lead on all other discount brokerages giving them more economies of scale and more income, especially because they get payment for orderflow. They will most likely lower their commissions eventually to steal business from other firms. Etrade and others need to increase their number of daily trades, and can only do that by M&A. Most likely they will reluctantly try to aquire Schwabb, or maybe Fidelity. However from what I know about Schwabb and Fidelity(which isn't much) it seems a merger between these two firms would be a good idea since they have more similar business models, and similar customers compared to other firms resulting in large synergies. I just remebered Scottrade, that would be a good purchase for Etrade! More mergers have to happen for firms to keep up with each other. Any merger would be beneficial two both firms involved because it will help to keep them competitive instead of their business slowly drying up and dying because they can't stay competitive.