updated 8/22/2007 9:20:04 AM ET 2007-08-22T13:20:04

Online brokerage giants TD Ameritrade Holding Corp. and E-Trade Financial Corp. have been holding talks for weeks about a possible merger, The Wall Street Journal reported Wednesday.

The discussions currently are focused on making sure both companies agree on strategy, and the companies aren't yet close to a deal, the Journal reported, citing unnamed people familiar with the matter.

A spokeswoman for E-Trade said the firm's management team believes there is "tremendous value in consolidation that aligns business strategy and operational synergies and will do what is in the best interest of its customers." An Ameritrade spokeswoman said, "We have talked and continue to talk to peers in the industry."

The companies previously have discussed an alliance but never reached a deal. This time, however, there is the added pressure of two hedge funds with big stakes in Ameritrade that have publicly urged the two companies to talk.

Jana Partners LLC and S.A.C. Capital Advisors, which claim to collectively own 8.4 percent of Ameritrade shares, have been urging Ameritrade to join forces with a major competitor such as E-Trade or Charles Schwab Corp. in the interests of the majority of shareholders.

They say Ameritrade's largest shareholder, Toronto-Dominion Bank, has undermined merger talks because it might diminish the bank's stake in Ameritrade. The funds also contend the Canadian bank, which owns about 40 percent of Ameritrade, stands to lose strategic benefits.

Toronto-Dominion officials have denied any conflict of interest.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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