London Capital Group shares fell 13 per cent on Monday after the spread betting group issued its third profit warning this year.

LCG, which allows investors to gamble on future movements in stocks and foreign exchange, said reduced market volatility and lower levels of interest income meant adjusted profits were now expected to be between £6m and £6.5m, compared with a consensus forecast of about £8.5m.

“Although trading revenue has remained strong, the group has continued to experience lower volatility and lower interest income on deposits,” it said. “These, combined with higher expenditure on infrastructure and white label partnerships, have impacted the group’s profitability.”

Just 18 months ago, LCG had appeared to have benefited from the credit crunch as investors seized upon the volatile markets as an opportunity to place bets. But in recent months the range-bound nature of the market meant punters had been able to make small bets with limited risk of large losses.

“Less volatility means that people are more confident about sitting on their positions when the market goes the other way,” said one analyst. “So there are less people closing out their losing positions, which is how spread-betting companies make much of their money.”

Shares in the group, down more than 40 per cent in the past 12 months, fell 21p to 142p, giving the company a market capitalisation of £54m.

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