diff --git a/apps/openstacknetworking/app/src/main/java/org/onosproject/openstacknetworking/impl/OpenstackRoutingArpHandler.java b/apps/openstacknetworking/app/src/main/java/org/onosproject/openstacknetworking/impl/OpenstackRoutingArpHandler.java
index e6be7ef..c016447 100644
--- a/apps/openstacknetworking/app/src/main/java/org/onosproject/openstacknetworking/impl/OpenstackRoutingArpHandler.java
+++ b/apps/openstacknetworking/app/src/main/java/org/onosproject/openstacknetworking/impl/OpenstackRoutingArpHandler.java
@@ -15,41 +15,80 @@
  */
 package org.onosproject.openstacknetworking.impl;
 
+import com.google.common.base.Strings;
+import com.google.common.collect.Maps;
 import org.apache.felix.scr.annotations.Activate;
 import org.apache.felix.scr.annotations.Component;
 import org.apache.felix.scr.annotations.Deactivate;
+import org.apache.felix.scr.annotations.Modified;
+import org.apache.felix.scr.annotations.Property;
 import org.apache.felix.scr.annotations.Reference;
 import org.apache.felix.scr.annotations.ReferenceCardinality;
 import org.onlab.packet.ARP;
+import org.onlab.packet.EthType;
 import org.onlab.packet.Ethernet;
 import org.onlab.packet.Ip4Address;
 import org.onlab.packet.IpAddress;
 import org.onlab.packet.MacAddress;
+import org.onlab.util.Tools;
+import org.onosproject.cfg.ComponentConfigService;
+import org.onosproject.cluster.ClusterService;
+import org.onosproject.cluster.LeadershipService;
+import org.onosproject.cluster.NodeId;
+import org.onosproject.core.ApplicationId;
+import org.onosproject.core.CoreService;
 import org.onosproject.net.DeviceId;
+import org.onosproject.net.Host;
 import org.onosproject.net.PortNumber;
+import org.onosproject.net.flow.DefaultTrafficSelector;
 import org.onosproject.net.flow.DefaultTrafficTreatment;
+import org.onosproject.net.flow.TrafficSelector;
 import org.onosproject.net.flow.TrafficTreatment;
+import org.onosproject.net.host.HostEvent;
+import org.onosproject.net.host.HostListener;
+import org.onosproject.net.host.HostService;
 import org.onosproject.net.packet.DefaultOutboundPacket;
 import org.onosproject.net.packet.InboundPacket;
 import org.onosproject.net.packet.PacketContext;
 import org.onosproject.net.packet.PacketProcessor;
 import org.onosproject.net.packet.PacketService;
 import org.onosproject.openstacknetworking.api.Constants;
+import org.onosproject.openstacknetworking.api.InstancePort;
+import org.onosproject.openstacknetworking.api.OpenstackFlowRuleService;
 import org.onosproject.openstacknetworking.api.OpenstackNetworkAdminService;
+import org.onosproject.openstacknetworking.api.OpenstackRouterEvent;
+import org.onosproject.openstacknetworking.api.OpenstackRouterListener;
 import org.onosproject.openstacknetworking.api.OpenstackRouterService;
 import org.onosproject.openstacknode.api.OpenstackNode;
 import org.onosproject.openstacknode.api.OpenstackNodeService;
+import org.openstack4j.model.network.ExternalGateway;
 import org.openstack4j.model.network.NetFloatingIP;
+import org.openstack4j.model.network.Port;
+import org.openstack4j.model.network.Router;
+import org.openstack4j.model.network.Subnet;
+import org.osgi.service.component.ComponentContext;
 import org.slf4j.Logger;
 
 import java.nio.ByteBuffer;
+import java.util.Dictionary;
+import java.util.Map;
 import java.util.Objects;
+import java.util.Optional;
 import java.util.Set;
 import java.util.concurrent.ExecutorService;
 import java.util.stream.Collectors;
 
 import static java.util.concurrent.Executors.newSingleThreadExecutor;
 import static org.onlab.util.Tools.groupedThreads;
+import static org.onosproject.openstacknetworking.api.Constants.ARP_BROADCAST_MODE;
+import static org.onosproject.openstacknetworking.api.Constants.ARP_PROXY_MODE;
+import static org.onosproject.openstacknetworking.api.Constants.DEFAULT_ARP_MODE_STR;
+import static org.onosproject.openstacknetworking.api.Constants.DEFAULT_GATEWAY_MAC_STR;
+import static org.onosproject.openstacknetworking.api.Constants.GW_COMMON_TABLE;
+import static org.onosproject.openstacknetworking.api.Constants.OPENSTACK_NETWORKING_APP_ID;
+import static org.onosproject.openstacknetworking.api.Constants.PRIORITY_ARP_GATEWAY_RULE;
+import static org.onosproject.openstacknetworking.impl.HostBasedInstancePort.ANNOTATION_NETWORK_ID;
+import static org.onosproject.openstacknetworking.impl.HostBasedInstancePort.ANNOTATION_PORT_ID;
 import static org.onosproject.openstacknode.api.OpenstackNode.NodeType.GATEWAY;
 import static org.slf4j.LoggerFactory.getLogger;
 
@@ -63,6 +102,10 @@
 
     private static final String DEVICE_OWNER_ROUTER_GW = "network:router_gateway";
     private static final String DEVICE_OWNER_FLOATING_IP = "network:floatingip";
+    private static final String ARP_MODE = "arpMode";
+
+    @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
+    protected CoreService coreService;
 
     @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
     protected PacketService packetService;
@@ -73,10 +116,39 @@
     @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
     protected OpenstackRouterService osRouterService;
 
-
     @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
     protected OpenstackNodeService osNodeService;
 
+    @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
+    protected ClusterService clusterService;
+
+    @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
+    protected LeadershipService leadershipService;
+
+    @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
+    protected OpenstackFlowRuleService osFlowRuleService;
+
+    @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
+    protected ComponentConfigService configService;
+
+    @Reference(cardinality = ReferenceCardinality.MANDATORY_UNARY)
+    protected HostService hostService;
+
+    // TODO: need to find a way to unify aprMode and gatewayMac variables with
+    // that in SwitchingArpHandler
+    @Property(name = ARP_MODE, value = DEFAULT_ARP_MODE_STR,
+            label = "ARP processing mode, proxy (default) | broadcast ")
+    protected String arpMode = DEFAULT_ARP_MODE_STR;
+
+    protected String gatewayMac = DEFAULT_GATEWAY_MAC_STR;
+
+    private final OpenstackRouterListener osRouterListener = new InternalRouterEventListener();
+    private final HostListener hostListener = new InternalHostListener();
+
+    private ApplicationId appId;
+    private NodeId localNodeId;
+    private Map<String, String> floatingIpMacMap = Maps.newConcurrentMap();
+
     private final ExecutorService eventExecutor = newSingleThreadExecutor(
             groupedThreads(this.getClass().getSimpleName(), "event-handler", log));
 
@@ -84,6 +156,12 @@
 
     @Activate
     protected void activate() {
+        appId = coreService.registerApplication(OPENSTACK_NETWORKING_APP_ID);
+        configService.registerProperties(getClass());
+        localNodeId = clusterService.getLocalNode().id();
+        osRouterService.addListener(osRouterListener);
+        hostService.addListener(hostListener);
+        leadershipService.runForLeadership(appId.name());
         packetService.addProcessor(packetProcessor, PacketProcessor.director(1));
         log.info("Started");
     }
@@ -91,13 +169,33 @@
     @Deactivate
     protected void deactivate() {
         packetService.removeProcessor(packetProcessor);
+        hostService.removeListener(hostListener);
+        osRouterService.removeListener(osRouterListener);
+        leadershipService.withdraw(appId.name());
         eventExecutor.shutdown();
+        configService.unregisterProperties(getClass(), false);
         log.info("Stopped");
     }
 
+    // TODO: need to find a way to unify aprMode and gatewayMac variables with
+    // that in SwitchingArpHandler
+    @Modified
+    void modified(ComponentContext context) {
+        Dictionary<?, ?> properties = context.getProperties();
+        String updateArpMode;
+
+        updateArpMode = Tools.get(properties, ARP_MODE);
+        if (!Strings.isNullOrEmpty(updateArpMode) && !updateArpMode.equals(arpMode)) {
+            arpMode = updateArpMode;
+        }
+
+        log.info("Modified");
+    }
+
     private void processArpPacket(PacketContext context, Ethernet ethernet) {
         ARP arp = (ARP) ethernet.getPayload();
-        if (arp.getOpCode() == ARP.OP_REQUEST) {
+
+        if (arp.getOpCode() == ARP.OP_REQUEST && arpMode.equals(ARP_PROXY_MODE)) {
             if (log.isTraceEnabled()) {
                 log.trace("ARP request received from {} for {}",
                         Ip4Address.valueOf(arp.getSenderProtocolAddress()).toString(),
@@ -114,7 +212,8 @@
 
             //In case target ip is for associated floating ip, sets target mac to vm's.
             if (floatingIP != null && floatingIP.getPortId() != null) {
-                targetMac = MacAddress.valueOf(osNetworkAdminService.port(floatingIP.getPortId()).getMacAddress());
+                targetMac = MacAddress.valueOf(osNetworkAdminService.port(
+                                        floatingIP.getPortId()).getMacAddress());
             }
 
             if (isExternalGatewaySourceIp(targetIp.getIp4Address())) {
@@ -139,14 +238,17 @@
                     ByteBuffer.wrap(ethReply.serialize())));
 
             context.block();
-        } else if (arp.getOpCode() == ARP.OP_REPLY) {
+        }
+
+        if (arp.getOpCode() == ARP.OP_REPLY) {
             PortNumber receivedPortNum = context.inPacket().receivedFrom().port();
             log.debug("ARP reply ip: {}, mac: {}",
                     Ip4Address.valueOf(arp.getSenderProtocolAddress()),
                     MacAddress.valueOf(arp.getSenderHardwareAddress()));
             try {
                 if (receivedPortNum.equals(
-                        osNodeService.node(context.inPacket().receivedFrom().deviceId()).uplinkPortNum())) {
+                        osNodeService.node(context.inPacket().receivedFrom()
+                                .deviceId()).uplinkPortNum())) {
                     osNetworkAdminService.updateExternalPeerRouterMac(
                             Ip4Address.valueOf(arp.getSenderProtocolAddress()),
                             MacAddress.valueOf(arp.getSenderHardwareAddress()));
@@ -191,4 +293,276 @@
                 .flatMap(osPort -> osPort.getFixedIps().stream())
                 .anyMatch(ip -> IpAddress.valueOf(ip.getIpAddress()).equals(targetIp));
     }
+
+    // FIXME: need to find a way to invoke this method during node initialization
+    private void initFloatingIpMacMap() {
+        osRouterService.floatingIps().forEach(f -> {
+            if (f.getPortId() != null && f.getFloatingIpAddress() != null) {
+                Port port = osNetworkAdminService.port(f.getPortId());
+                if (port != null && port.getMacAddress() != null) {
+                    floatingIpMacMap.put(f.getFloatingIpAddress(), port.getMacAddress());
+                }
+            }
+        });
+    }
+
+    /**
+     * Installs static ARP rules used in ARP BROAD_CAST mode.
+     * Note that, those rules will be only matched ARP_REQUEST packets,
+     * used for telling gateway node the mapped MAC address of requested IP,
+     * without the helps from controller.
+     *
+     * @param fip       floating IP address
+     * @param install   flow rule installation flag
+     */
+    private void setFloatingIpArpRule(NetFloatingIP fip, boolean install) {
+        if (arpMode.equals(ARP_BROADCAST_MODE)) {
+
+            if (fip == null) {
+                log.warn("Failed to set ARP broadcast rule for floating IP");
+                return;
+            }
+
+            String macString;
+
+            if (install) {
+                if (fip.getPortId() != null) {
+                    macString = osNetworkAdminService.port(fip.getPortId()).getMacAddress();
+                    floatingIpMacMap.put(fip.getFloatingIpAddress(), macString);
+                } else {
+                    log.trace("Unknown target ARP request for {}, ignore it",
+                            fip.getFloatingIpAddress());
+                    return;
+                }
+            } else {
+                macString = floatingIpMacMap.get(fip.getFloatingIpAddress());
+            }
+
+            MacAddress targetMac = MacAddress.valueOf(macString);
+
+            TrafficSelector selector = DefaultTrafficSelector.builder()
+                    .matchEthType(EthType.EtherType.ARP.ethType().toShort())
+                    .matchArpOp(ARP.OP_REQUEST)
+                    .matchArpTpa(Ip4Address.valueOf(fip.getFloatingIpAddress()))
+                    .build();
+
+            TrafficTreatment treatment = DefaultTrafficTreatment.builder()
+                    .setArpOp(ARP.OP_REPLY)
+                    .setArpSha(targetMac)
+                    .setArpSpa(Ip4Address.valueOf(fip.getFloatingIpAddress()))
+                    .setOutput(PortNumber.IN_PORT)
+                    .build();
+
+            osNodeService.completeNodes(GATEWAY).forEach(n ->
+                    osFlowRuleService.setRule(
+                            appId,
+                            n.intgBridge(),
+                            selector,
+                            treatment,
+                            PRIORITY_ARP_GATEWAY_RULE,
+                            GW_COMMON_TABLE,
+                            install
+                    )
+            );
+
+            if (install) {
+                log.info("Install ARP Rule for Floating IP {}",
+                        fip.getFloatingIpAddress());
+            } else {
+                log.info("Uninstall ARP Rule for Floating IP {}",
+                        fip.getFloatingIpAddress());
+            }
+        }
+    }
+
+    /**
+     * An internal router event listener, intended to install/uninstall
+     * ARP rules for forwarding packets created from floating IPs.
+     */
+    private class InternalRouterEventListener implements OpenstackRouterListener {
+
+        @Override
+        public boolean isRelevant(OpenstackRouterEvent event) {
+            // do not allow to proceed without leadership
+            NodeId leader = leadershipService.getLeader(appId.name());
+            return Objects.equals(localNodeId, leader);
+        }
+
+        @Override
+        public void event(OpenstackRouterEvent event) {
+            switch (event.type()) {
+                case OPENSTACK_ROUTER_CREATED:
+                    eventExecutor.execute(() ->
+                        // add a router with external gateway
+                        setFakeGatewayArpRule(event.subject(), true)
+                    );
+                    break;
+                case OPENSTACK_ROUTER_REMOVED:
+                    eventExecutor.execute(() ->
+                        // remove a router with external gateway
+                        setFakeGatewayArpRule(event.subject(), false)
+                    );
+                    break;
+                case OPENSTACK_ROUTER_GATEWAY_ADDED:
+                    eventExecutor.execute(() ->
+                        // add a gateway manually after adding a router
+                        setFakeGatewayArpRule(event.externalGateway(), true)
+                    );
+                    break;
+                case OPENSTACK_ROUTER_GATEWAY_REMOVED:
+                    eventExecutor.execute(() ->
+                        // remove a gateway from an existing router
+                        setFakeGatewayArpRule(event.externalGateway(), false)
+                    );
+                    break;
+                case OPENSTACK_FLOATING_IP_ASSOCIATED:
+                    eventExecutor.execute(() ->
+                        // associate a floating IP with an existing VM
+                        setFloatingIpArpRule(event.floatingIp(), true)
+                    );
+                    break;
+                case OPENSTACK_FLOATING_IP_DISASSOCIATED:
+                    eventExecutor.execute(() ->
+                        // disassociate a floating IP with the existing VM
+                        setFloatingIpArpRule(event.floatingIp(), false)
+                    );
+                    break;
+                case OPENSTACK_FLOATING_IP_CREATED:
+                    eventExecutor.execute(() -> {
+                        NetFloatingIP osFip = event.floatingIp();
+
+                        // during floating IP creation, if the floating IP is
+                        // associated with any port of VM, then we will set
+                        // floating IP related ARP rules to gateway node
+                        if (!Strings.isNullOrEmpty(osFip.getPortId())) {
+                            setFloatingIpArpRule(osFip, true);
+                        }
+                    });
+                    break;
+                case OPENSTACK_FLOATING_IP_REMOVED:
+                    eventExecutor.execute(() -> {
+                        NetFloatingIP osFip = event.floatingIp();
+
+                        // during floating IP deletion, if the floating IP is
+                        // still associated with any port of VM, then we will
+                        // remove floating IP related ARP rules from gateway node
+                        if (!Strings.isNullOrEmpty(osFip.getPortId())) {
+                            setFloatingIpArpRule(event.floatingIp(), false);
+                        }
+                    });
+                    break;
+                default:
+                    // do nothing for the other events
+                    break;
+            }
+        }
+
+        private void setFakeGatewayArpRule(ExternalGateway extGw, boolean install) {
+            if (arpMode.equals(ARP_BROADCAST_MODE)) {
+
+                if (extGw == null) {
+                    return;
+                }
+
+                Optional<Subnet> subnet = osNetworkAdminService.subnets(
+                                    extGw.getNetworkId()).stream().findFirst();
+                if (!subnet.isPresent()) {
+                    return;
+                }
+
+                String gateway = subnet.get().getGateway();
+
+                TrafficSelector selector = DefaultTrafficSelector.builder()
+                        .matchEthType(EthType.EtherType.ARP.ethType().toShort())
+                        .matchArpOp(ARP.OP_REQUEST)
+                        .matchArpTpa(Ip4Address.valueOf(gateway))
+                        .build();
+
+                TrafficTreatment treatment = DefaultTrafficTreatment.builder()
+                        .setArpOp(ARP.OP_REPLY)
+                        .setArpSha(MacAddress.valueOf(gatewayMac))
+                        .setArpSpa(Ip4Address.valueOf(gateway))
+                        .setOutput(PortNumber.IN_PORT)
+                        .build();
+
+                osNodeService.completeNodes(GATEWAY).forEach(n ->
+                        osFlowRuleService.setRule(
+                                appId,
+                                n.intgBridge(),
+                                selector,
+                                treatment,
+                                PRIORITY_ARP_GATEWAY_RULE,
+                                GW_COMMON_TABLE,
+                                install
+                        )
+                );
+
+                if (install) {
+                    log.info("Install ARP Rule for Gateway {}", gateway);
+                } else {
+                    log.info("Uninstall ARP Rule for Gateway {}", gateway);
+                }
+            }
+        }
+
+        private void setFakeGatewayArpRule(Router router, boolean install) {
+            setFakeGatewayArpRule(router.getExternalGatewayInfo(), install);
+        }
+    }
+
+    /**
+     * An internal host event listener, intended to uninstall
+     * ARP rules during host removal. Note that this is only valid when users
+     * remove host without disassociating floating IP with existing VM.
+     */
+    private class InternalHostListener implements HostListener {
+
+        @Override
+        public boolean isRelevant(HostEvent event) {
+            Host host = event.subject();
+            if (!isValidHost(host)) {
+                log.debug("Invalid host detected, ignore it {}", host);
+                return false;
+            }
+            return true;
+        }
+
+        @Override
+        public void event(HostEvent event) {
+            InstancePort instPort = HostBasedInstancePort.of(event.subject());
+            switch (event.type()) {
+                case HOST_REMOVED:
+                    removeArpRuleByInstancePort(instPort);
+                    break;
+                case HOST_UPDATED:
+                case HOST_ADDED:
+                default:
+                    break;
+            }
+        }
+
+        private void removeArpRuleByInstancePort(InstancePort port) {
+            Set<NetFloatingIP> ips = osRouterService.floatingIps();
+            for (NetFloatingIP fip : ips) {
+                if (Strings.isNullOrEmpty(fip.getFixedIpAddress())) {
+                    continue;
+                }
+                if (Strings.isNullOrEmpty(fip.getFloatingIpAddress())) {
+                    continue;
+                }
+                if (fip.getFixedIpAddress().equals(port.ipAddress().toString())) {
+                    eventExecutor.execute(() ->
+                        setFloatingIpArpRule(fip, false)
+                    );
+                }
+            }
+        }
+
+        // TODO: should be extracted as an utility helper method sooner
+        private boolean isValidHost(Host host) {
+            return !host.ipAddresses().isEmpty() &&
+                    host.annotations().value(ANNOTATION_NETWORK_ID) != null &&
+                    host.annotations().value(ANNOTATION_PORT_ID) != null;
+        }
+    }
 }
diff --git a/apps/openstacknetworking/app/src/main/java/org/onosproject/openstacknetworking/impl/OpenstackSwitchingArpHandler.java b/apps/openstacknetworking/app/src/main/java/org/onosproject/openstacknetworking/impl/OpenstackSwitchingArpHandler.java
index 0879b93..c354f19 100644
--- a/apps/openstacknetworking/app/src/main/java/org/onosproject/openstacknetworking/impl/OpenstackSwitchingArpHandler.java
+++ b/apps/openstacknetworking/app/src/main/java/org/onosproject/openstacknetworking/impl/OpenstackSwitchingArpHandler.java
@@ -448,6 +448,7 @@
 
         private void setDefaultArpRule(OpenstackNode openstackNode, boolean install) {
             if (arpMode.equals(ARP_PROXY_MODE)) {
+
                 TrafficSelector selector = DefaultTrafficSelector.builder()
                         .matchEthType(EthType.EtherType.ARP.ethType().toShort())
                         .build();
@@ -466,26 +467,31 @@
                         install
                 );
             } else if (arpMode.equals(ARP_BROADCAST_MODE)) {
-                // TODO: currently, do not install any rules to GW in broadcast mode;
-                // need to add Floating IP to MAC mapping flow rules
+
+                TrafficSelector.Builder selectorBuilder = DefaultTrafficSelector.builder()
+                        .matchEthType(EthType.EtherType.ARP.ethType().toShort());
+
+                TrafficTreatment.Builder treatmentBuilder = DefaultTrafficTreatment.builder();
+
+                // we only match ARP_REPLY in gateway node, because controller
+                // somehow need to process ARP_REPLY which is issued from
+                // external router...
+                // TODO: following code needs to be moved to OpenstackRoutingArpHandler sooner or later
                 if (openstackNode.type().equals(GATEWAY)) {
-                    return;
+                    selectorBuilder.matchArpOp(ARP.OP_REPLY);
+                    treatmentBuilder.punt();
                 }
 
-                TrafficSelector selector = DefaultTrafficSelector.builder()
-                        .matchEthType(EthType.EtherType.ARP.ethType().toShort())
-                        .matchArpOp(ARP.OP_REQUEST)
-                        .build();
-
-                TrafficTreatment treatment = DefaultTrafficTreatment.builder()
-                        .setOutput(PortNumber.FLOOD)
-                        .build();
+                if (openstackNode.type().equals(COMPUTE)) {
+                    selectorBuilder.matchArpOp(ARP.OP_REQUEST);
+                    treatmentBuilder.setOutput(PortNumber.FLOOD);
+                }
 
                 osFlowRuleService.setRule(
                         appId,
                         openstackNode.intgBridge(),
-                        selector,
-                        treatment,
+                        selectorBuilder.build(),
+                        treatmentBuilder.build(),
                         PRIORITY_ARP_SUBNET_RULE,
                         DHCP_ARP_TABLE,
                         install