Online brokerage E*Trade Financial Corp. (ET) said on Thursday it would buy BrownCo from J.P. Morgan Chase & Co. (JPM) for $1.6 billion, its second major acquisition in the rapidly consolidating discount brokerage business since August.

The deal is expected to generate about $91 million in cost savings and $63 million in added revenue, adding about 7 cents per share to E*Trade earnings within a year after it closes. The transaction will bring E*Trade's net customer assets to about $160 billion, and the company expects customer accounts to total about 4.3 million.

J.P. Morgan said it would book an after-tax gain of about $700 million on the sale, which is expected to close by the end of the year, subject to regulatory approvals.

J.P. Morgan said it is selling the unit to allow its asset and wealth management business to focus more on investment management and wealth advisory services, rather than the active-trader business, which is BrownCo's hallmark.

BrownCo (search) has about 200,000 active accounts, which generate about 28,000 trades per day and $29 billion in client assets. BrownCo's customer account balances average more than $145,000, the second highest average in the sector, E*Trade said.

"The acquisition of BrownCo complements the recent acquisition of Harrisdirect (search), by strengthening and extending our asset gathering strategy with a strong customer demographic, while delivering greater scale," E*Trade Chief Executive Mitchell Caplan said in a statement.

In August, E*Trade agreed to buy HarrisDirect from Canada's BMO Financial Group for $700 million.

The deal highlights the industry's mood of consolidation, as it looks for ways to win new customers in different markets as online stock trading grows more common.

Earlier this year, E*Trade's overtures toward rival Ameritrade Holding Corp. (AMTD) were rebuffed. Later in June, Ameritrade agreed to acquire rival TD Waterhouse USA from Canada's Toronto-Dominion Bank.