TD Bank Financial Group and E*Trade Financial Corp. have mutually agreed to terminate discussions that could have led to a merger of the TD Waterhouse U.S. operations with E*Trade.

A merger of the companies would have created the second-largest discount brokerage in the United States.

In a statement issued yesterday, the companies said that “while there were potential benefits to concluding a transaction that merited serious discussion, they were unable to arrive at mutually agreeable terms.”

According to media reports, the apparent stumbling block was over who would run the company in the wake of a deal. TD is reported to have been seeking management control of the new company.