Schwab has the same arrangement with UK, AFAIK
It originated in the 70s when people were still using paper certificates, which could get lost or stolen or burned. Today with centralized electronic record keeping, it’s probably less of an issue, but protection against fraud and system failures might still be useful I imagine, and not to forget generous cash protection limit
The shares you keep at IB and most other US brokers are electronically registered in the name of the broker, not yours, btw. You’re just recorded as their beneficial owner on broker’s books