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A hedge fund's attempts to play matchmaker between TD Ameritrade and E*Trade have, not surprisingly, fallen flat.

Speculation that TD Ameritrade might finally have developed a liking for its rival discount broker has been cropping up routinely every few months for years, driven largely by hedge funds who would profit from such a takeover. Executives at each of the discount brokers have never flat out rejected the notion, but TD Ameritrade is in no rush to gamble on a partner.

The rumours emerged again this summer after E*Trade disclosed that its board had received a letter from the hedge fund Citadel, who is the discount broker's largest shareholder, suggesting that E*Trade consider its strategic alternatives including a potential sale of the company. It's an open secret that Citadel thinks TD Ameritrade and E*Trade would be a good match.

After receiving the letter, E*Trade hired Goldman and formed a special committee of its board to review the firm's alternatives. The move was slightly comedic, given that J.P. Morgan had just completed a similar process for E*Trade late last year and the firm had decided not to sell. On Thursday, E*Trade announced that - once again – it will not sell, but rather will stick to its own business plan.

Toronto-Dominion Bank is TD Ameritrade's biggest shareholder, and bank CEO Ed Clark has made it clear over the years that he doesn't want Ameritrade buying E*Trade if it means taking on a significant amount of new risks.

E*Trade was pummelled during the financial crisis, and hovered near possible bankruptcy in early 2008. Its stock plunged over fears about mortgage loan losses, and TD Ameritrade gained customers at its rival's expense.

In early 2010, Mr. Clark said it would take a year to sort through the impact that continued turmoil in the U.S. housing market might have on E*Trade's balance sheet. With uncertainty continuing to linger, and new market turmoil erupting because of Europe, TD Ameritrade's largest shareholder is unlikely to give the green light to a takeover any time soon.

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