Ahh, I see. My understanding is slightly different. I have been under the impression to use your example, that although your ETF will be segregated from IB's own assets it will nevertheless be pooled with other clients' assets. In the event of default, you would only receive a prorata share of these pooled assets. So if there wasn't enough money to pay everyone back, you would receive a haircut. In that sense, I had thought your counterparty would still be IB and not the ETF provider.
Now its entirely possible that setting up a separate non-margin account doesn't mitigate against the above risk, but my understanding from the answers from IB was that any securities bought would a) not be lent and therefore b) have higher level of segregation, but I wonder if b) is in fact also incorrect.
