Updated from 7:46 a.m. EDT

Fresh off a defeat in its efforts to merge with Ameritrade ( AMTD - Get Report), E*Trade ( ET - Get Report) said Monday that it is buying the U.S. online brokerage operations of Harrisdirect.

Shares rallied on the deal, which E*Trades believes will add 17 cents a share to its earnings once completed. The stock was recently up $1.40, or 9%, to $16.26.

E*Trade will exchange $700 million in cash for the unit, which has about 430,000 active accounts making up $32 billion in assets. The seller is BMO Financial ( BMO - Get Report), the Toronto-based holding company for Bank of Montreal.

E*Trade said the acquisition will provide an immediate boost to its most closely watched metric, daily average revenue trades, to 130,000. The deal will boost its overall account total to 4 million and raise its total customer assets to $130 billion.

"With the acquisition of Harrisdirect, we take a strategic step in further evolving our franchise. We accelerate our growth goals by extending our asset-gathering strategy and fully leveraging customer cash, order flow and borrowing relationships across our integrated platform," E*Trade said. "We will continue to actively pursue opportunities that enable us to further build out our distinct business model."

E*Trade's efforts to merger with online rival Ameritrade were foiled in June when Ameritrade struck a deal to acquire TD Waterhouse from another Canadian bank, Toronto Dominion ( TD - Get Report).

As originally published, this story contained an error. Please see Corrections and Clarifications.