NYSE Euronext (NYX) acquired American Stock Exchange (Amex) in 2008 to expand its equities, options and exchange-traded funds (ETFs) trading business. Recently NYSE announced plans to sell the majority of its stake in the Amex stock options market to seven companies -- including top banks, trading houses and brokerages. With this move, the company hopes to increase its trading volumes by giving major brokerages an incentive to bring their business to Amex. Major competitors are Nasdaq OMX (NDAQ), CME Group (CME), BATS Global and Direct Edge.

After the stock market meltdown of 2008, Wall Street brokerages aren't anyone's favorites in 2009.

But some customers said they're still happy with their online broker.

A December ChangeWave survey of 3,051 consumers found that despite the extremely difficult financial market, two online brokerages still capture high customer satisfaction ratings -- Charles Schwab (NASDAQ: SCHW) and archrival, Scottrade.

If there is a silver lining in the disaster that has been investing in the markets in 2008, it's that increases in volatility made it possible to generate huge returns moving in and out of stocks in a very short period of time.

Day trading had all but disappeared after the dot-com crash. And while the strategy is making a comeback in a major way this year, investors have yet to catch on.

Think about it for a moment. What businesses were at the forefront of this investment strategy?

Discount online brokers, led by E*Trade Financial Corp. (NASDAQ: ETFC), were some of the biggest winners during the boom in day trading.

With everyone and their mother trading stock tips in the 1990s, brokers made increases in customer accounts and trading commissions that led to big profits.

Now, with fertile ground for day trading back in play, are the discount brokers worth owning in this environment?

Well, one would think that now would be an excellent time to be owning the discount broker stocks, but that hasn't borne itself out as of yet. What gives?

DealBook reports that Wall Street firms are expected to dismiss 20,000 more workers in the next two years. That's based on plummeting profit expectations for these brokerages.

The earnings forecast for Wall Street is gloomy. New York's Independent Budget Office (IBO) estimated that Wall Street's profits for 2007 will sink by 85% to the lowest level since 1994. When the final totals are in, profits for 2007 are expected to be $3.2 billion, down from $20.9 billion in 2006. Perhaps optimistically, IBO expects a quick and dramatic recovery -- with Wall Street's profits expected to spike 106%in 2008 to $6.6 billion and rise 85% more in 2009 to $12.2 billion.

I hope for New York's sake that IBO is right about 2008 and 2009. IBO expects bulk of Wall Street's job cuts -- 12,600 -- to occur in 2008 followed by 7,600 cuts in 2009. The IBO's analysis does not take into account layoffs at The Bear Stearns Companies (NYSE: BSC) , whose work force of 14,000 includes about 8,000 employees in New York -- CNBC reported that JPMorgan Chase & Co. (NYSE: JPM) expects to cut 50% of Bear's total work force.

optionsXpress Holdings Inc. (NASDAQ: OXPS) offers an online retail brokerage platform that provides brokerage services for options, stocks, futures, mutual funds, and fixed-income products investors in the United States and internationally. Recently the company announced strong growth in November metrics.

Daily average revenue trades (DARTs) were 44,500, which was 55% higher than November 2006, and slightly lower than October 2007. Net new customer accounts were 5,300. Ending customer accounts were 258,100, or 27% higher than November 2006, 2% higher than October 2007. Ending client assets were $5.8 billion, which was 25% higher than November 2006, 4% lower than October 2007. Ending margin balances were $200 million, which was 51% higher than November 2006 and 2% higher than October 2007

This strong growth comes at a time when investors can be hard pressed to find any financial stock that has been reporting solid growth. It's important to note that they are much less impacted by deteriorating credit markets than some of their brokerage friends such as Merrill Lynch & Co., Inc. (NYSE: MER) What's more, the stock is trading at its 52 week-high. Sporting a PE of 22.60, and more importantly, a PEG of just 0.9, this stock looks like a winner moving forward. Investors who want exposure to financials should take a hard look at optionsXpress.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Author has no position in any stock mentioned as of 12/31207.

The nation's fourth largest brokerage firm, Lehman Brothers (NYSE: LEH), reported its August 31st quarterly results this morning. Investors began to breathe a sigh of relief as the numbers beat Street's expectations posting $1.54 earnings per share versus the expected $1.43 EPS. Earnings were 3% lower from last year's results, which were accomplished in an accelerating environment.

Lehman Brothers acknowledged a $700 million hit from "substantial value reductions" in mortgage-backed securities. The investment banking and retail brokerage fees were up 3.1% for the quarter and total revenues were $4.3 billion. Lehman Brothers stated that 53% of its revenue totals came from overseas activities, helping to absorb mortgage-backed securities losses.

Lehman Brothers, once known as a pure trading house, has diversified its revenue stream substantially. Coupled with more than 50% of its revenues coming from international sources, the giant firm has shown it can weather the credit-storm.

The stock is up over 4% today on the relief factor. The next few days will see Bear Stearns (NYSE: BSC), Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS) report their August results as well. If Lehman Brothers is any indication, investors may again feel these stocks have come down too much and begin nibbling away on the buy side. The only remaining significant issue is the credit markets and if they have indeed calmed down. If so, the leverage in the business model of the major four firms could begin to re-accelerate earnings in 2008.

Georges Yared is the CIO of Yared Investment Research and the author of Baby Boomer Investing...Where do we go from here?

Merrill Lynch & Co. (NYSE:MER) posted earnings above and beyond Wall Street expectations, proving the company's many naysers wrong.

The financial services giant posted earnings per share of $2.24 on revenue of $9.7 billion, easiily surpassing analysts' estimates of EPS of $2.02 EPS and $9.25 billion in revenue.

A few weeks ago, brokerage stocks were being crushed when Bear Stearns (NYSE:BSC) was facing sharp hedge fund markdowns from toxic mortgage losses. Bloomberg has an article pointing to some $11 billion that the Wall Street firms are having to eat because of a credit crunch on some of the private equity deals.

Chairman & CEO, Stan O'Neal, noted in the release that revenue diversification made the strong performance possible despite uneven market conditions in what he described as "at times, a hostile market environment." That is referring to the current mortgage and debt markets that have been punishing big Wall Street firms..

The firm did not offer any formal guidance since brokerage firms are subject to conditions in the stock and bond markets. Super-leveraged debt instruments and derivatives help brokers live by the sword and die by the sword. So, as long as the markets remain healthy overall, then Merrill and its main competitors among so-called bulge bracket firms should be fine.

Merrill Lynch shares had traded over $89.00 in early trading, but shares are nearly back to flat at $87.45 on the day.

Jon Ogg is a partner at 24/7 Wall St.; he does not own securities in the companies he covers.

Citgroup Inc. (NYSE:C), which already plans to spend $13.4 billion for Japanese brokerage Nikko Cordial, now reportedly has its sights set on ABN AMRO Inc. (NYSE:ABN), the Dutch bank that's in discussions to merge Wit Barclays Plc. (LON:BARC).

If the Japanese deal -- which has encountered some opposition -- happens and Citigroup is able to outflank Barclays for ABN AMRO what will it do then? ABN AMRO has a market capitalization of about $80 billion. Nikko Cordial and ABN AMRO would be a lot for Citigroup to integrate at once.

Chief Executive Charles Prince, though, may have no choice but to take that risk.

Shares of Citigroup have risen only 4 percent over the past five years, underperforming its peers including Morgan Stanley (NYSE:MS) up 44 percent, Merrill Lynch & Co. (NYSE:MER) up 56 percent and Goldman Sachs Group Inc. (NYSE:GS), up 134 percent.

Even so, the prospect of Citigroup entering the bidding from ABN AMRO should worry Barclays. Other U.S. and financial services firms who are seeking growth overseas may enter the fray as well.

The ABN AMRO saga has just begun.