I've only recently started learning about how trading works in depth so I'm probably way off, but isn't he just avoiding the obvious answer? The broker and the clearing house. I thought that's a large part of why we have them? It just so happens that counterparty risk includes handling of massive amounts of physical goods so they'll have to charge larger commissions to cover the additional risk on the contracts. It would probably reduce the number of speculators at the same time, reducing the risk of this happening to begin with.
When the price mayhem was happening there was a discussion here on HN, and someone claimed that brokers would either never let retail investors handle contracts with physical delivers, or forcibly close the positions several days before the deadline.
Looks like Interactive Brokers fucked up in more than one way here.
Don't know why you're being downvoted. Physical delivery IS a third rail for retail investors and brokers should absolutely have a field in their settings page that authorizes them to close the position x days or hours before maturity.
