In the whirlwind of dealmaking in the online brokerage business, E*Trade Financial (NYSE:ET) appeared to be left out of the fun. But that changed yesterday, when the company announced it will shell out $700 million in cash to purchase Harrisdirect from BMO Financial Group (NYSE:BMO).

It was only a couple months ago that Ameritrade (NASDAQ:AMTD) agreed to purchase TorontoDominion's (NYSE:TD) TD Waterhouse for $2.9 billion. Actually, E*Trade tried to buy Ameritrade -- but was jilted.

So, in a way, Harrisdirect is E*Trade's second choice. Not to say it's a bad choice. In the deal, E*Trade will pick up 430,000 active customer accounts, which have a high average balance of $74,884 (this compares to E*Trade's $26,563). Other benefits include access to high-quality institutional research and a more robust IPO platform.

In fact, Wall Street also likes the deal. On the announcement, E*Trade's stock increased 8.34% to $16.10. The excitement may be attributed to likely synergies and to the expectation that the transaction will be accretive to E*Trade.

E*Trade expects combining the two entities will reduce expenses by $114 million, including $19 million for salaries and benefits; $18 million for clearing; $27 million for advertising; $45 million for occupancy and equipment; and $5 million for communications and professional services.

Furthermore, E*Trade expects $72 million in revenue synergies -- primarily the result of net interest income from its banking operations, which will result from the increase in assets under management.

After about nine months, the deal is expected to add $0.17 per share in earnings on an annual basis for E*Trade.

With this deal, the online brokerage industry has four major players: E*Trade, Ameritrade, Motley Fool Stock Advisor recommendation Charles Schwab & Co. (NYSE:SCH), and Scottrade. With the consolidation, it is reasonable to assume that the intense downward pressures on commission pricing will continue (definitely bad news for traders).

Also, it appears that -- in light of the recent pickup in the equities markets -- trading volume will start to increase, further improving the bottom line for online brokers.

In fairness, this might well be a short-lived phenomenon. As long as there are a couple of players, there is still likely to be competition and some degree of pressure on pricing.

But do not expect the consolidation to end -- as E*Trade's CEO indicated. There may be other matchups among the Big Four, as well as smaller operations getting scooped up, such as OptionsXpress (NASDAQ:OXPS).

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Fool contributor Tom Taulli does not own shares of any company mentioned in this article.