Ameritrade Holding has struck a deal to acquire TD Waterhouse USA for about $3bn in stock, combining two rival discount brokers in the face of declining volumes and lower margins. The agreement was sealed at the end of a Tuesday night board meeting during which a $7bn offer by E*Trade Financial, another discount broker, to take over Ameritrade was rejected.

Under the deal, TD Bank will retain a 32 per cent stake in the combined group and Ameritrade shareholders will receive a cash dividend worth $6 a share. In addition, TD Bank will buy Ameritrade's Canadian brokerage arm for $60m in cash.