It's fired from a barrel attached to SMAW rocket launchers. It's used to find the impact point of the rocket before firing it. Similar to the usage of the .50 spotter cartridge in conjunction with the 106mm recoiless rifle.Some nice and unusual cartridges you have there! What is the 9x51mm SMAW cartridge used for?
It uses an interesting high-low propulsion system. There is actually a .22 hornet case impressed in the base. This contains the charge which ignites the tracer and launches the projectile. The main cartridge is a necked up 7.62x51.
The mechanism on the aiming gun is primer actuated. The .22 hornet case backs out upon firing, and the rearward travel of this case is what cycles the action.